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URBANA 

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Itohert  Clarke  &  Co.,  Printers,  Cincinnati.]  [  February ,  1882. 


ak  Street 
LASSIFIED 

SUPREME  COURT  OF  OHIO. 


THE  STATE  OF  OHIO,  ON  THE  RELATION  OF  GEORGE  K. 

NASH,  ATTORNEY  GENERAL, 

Plaintiff, 


AGAINST 


WILLIAM  IT.  VANDERBILT,  AND  OTHERS, 

*  » 

Defendants. 


IN  QUO  WARRANTO. 


* 


J.  H.  DEVEREAUX,  AND  OTHERS, 

Plaintiffs  in  Error, 


versus. 


HUGH  J.  JEWETT,  TRUSTEE,  AND  R.  SUYDAM  GRANT, 

Defendants  in  Error. 


ON  PETITION  IN  ERROR. 


ARGUMENT  IN  SUPPORT  OF  THE  PETITION  IN  QUO  WARRANTO, 
AND  AGAINST  THE  PETITION  IN  ERROR. 


By  AARON  F.  PERRY. 


IF'URY' 

U#IVEl3ITY  OF  IUIN9I3 
UR8ANA 


SUPREME  COURT  OF  OHIO. 


THE  STATE  OF  OHTO,  ON  THE  RELATION  OF  GEORGE  K. 

NASH,  ATTORNEY  GENERAL, 


AGAINST 


Plaintiff, 


WILLIAM  H.  VANDERBILT,  AUGUSTUS  SCHELL,  JAMES  H. 
BUTLER,  A.  G.  DULMAN,  WILLIAM  L.  SCOTT,  J.  H.  DEVER- 
EAUX,  STEVENSON  BURKE,  T.  P.  HANDY,  AMOS  TOWN¬ 
SEND,  JOHN  NEWELL,  M.  E.  INGALLS,  and  JOHN  CARLISLE. 

Defendants. 


IN  QUO  WABKANTO. 


ARGUMENT  IN  SUPPORT  OF  THE  PETITION, 

By  AARON  F.  PERRY. 


STATEMENT. 

The  petition  alleges  that  the  defendants,  and  other 
persons  so  numerous  that  it  is  impracticable  to  bring  them 
all  before  the  court,  are  acting  and  assuming  to  act  as  a 
corporation,  and  an  incorporated  company  within  the  State 
of  Ohio,  to  wit,  in  the  county  of  Cuyahoga,  without  being 
legally  authorized  so  to  do;  and  that  they  are  assuming  to 
exercise  and  are  exercising,  within  the  State  of  Ohio,  cer¬ 
tain  liberties,  privileges,  franchises,  and  authorities  not 
warranted  by  law,  and  for  more  than  days  last 

past  have  used  and  are  still  using,  without  any  grant,  war¬ 
rant,  or  charter,  the  liberties,  privileges  and  franchises  of 


being  a  body  corporate  in  fact,  law  and  name,  and  by  the 
name  of  “  The  Ohio  Railway  Company,7’  etc.,  etc. 

The  defendants  answer  that  they  and  their  associates 
lawfully  and  rightfully  have,  hold,  exercise  and  enjoy,  un¬ 
der  the  corporate  name  of  “  The  Ohio  Railway  Company,77 
the  liberties,  privileges,  tranches  and  authorities  named  in 
the  petition,  and  each  and  all  of  them.  They  allege  title  to 
the  franchises  of  said  corporation  by  and  through  certain 
proceedings,  the  legal  result  of  which  they  allege  to  be  a 
consolidation  of  other  railway  corporations,  before  exist¬ 
ing,  into  the  Ohio  Railway  Company,  whereby  it  became  a 
lawful  corporation  under  the  laws  of  Ohio.  The  answer 
contains  statements  of  the  organization  and  existence,  be¬ 
fore  said  proceedings  for  consolidation,  of  seven  railway 
corporations,  and  states  the  lines  of  road  represented  by 
them,  all  of  "which  are  relevant  to  the  case,  but  the  allega¬ 
tions  concerning  them  are  too  extended  for  a  preliminary 
statement. 

The  state  replies,  contesting  some  of  the  allegations  of 
fact  made  in  the  answer,  and  denying  the  legal  validity  of 
the  proceedings  for  consolidation. 

On  the  pleadings  and  on  an  agreed  statement  of  facts 
the  case  is  presented  for  argument. 

Two  parallel  and  competing  lines  of  railway  extend 
from  the  Ohio  river  systems  of  transportation  to  the  lake 
system.  The  southern  termini  of  both  lines  are  at  Cincin¬ 
nati.  The  northern  terminus  of  the  most  western  line  is 
at  Toledo,  and  the  northern  terminus  of  the  most  eastern 
line  is  at  Cleveland.  The  most  western  of  the  two  lines  is 
made  up  of  two'  parts  which  meet  each  other  at  Dayton, 

the  part  between  Cincinnati  and  Dayton  being  owned  in 

♦ 

fee  simple  by  the  Cincinnati,  Hamilton  and  Dayton  Rail¬ 
road  Company,  which  stocks  and  works  it;  the  part  be¬ 
tween  Dayton  and  Toledo  was  constructed  by  the  Dayton 


and  Michigan  Railroad  Company,  but  is  and  for  many 
years  has  been  stocked  and  worked  by  the  Cincinnati,  Ham¬ 
ilton  and  Dayton  Company  under  a  contract  with  the  Day- 
ton  and  Michigan  Company  for  a  permanent  running  ar¬ 
rangement  and  apportionment  of  earnings,  with  conditions 
of  defeasance  and  mutual  stipulations.  The  Cincinnati, 
Richmond  and  Chicago  railway  connects  with  the  road  of 
the  Cincinnati,  Hamilton  and  Dayton  Company,  at  the  city 
of  Hamilton,  Ohio,  extends  to  the  city  of  Richmond,  Indi¬ 
ana,  and  is  stocked  and  worked  by  the  Cincinnati,  Hamil¬ 
ton  and  Dayton  Company,  under  a  contract  with  the*  Cin¬ 
cinnati,  Richmond  and  Chicago  Company,  similar  in  most 
respects  with  the  contract  in  regard  to  the  Dayton  and 
Michigan  road;  but,  under  this  contract,  all  the  net  earn¬ 
ings  are  to  be  paid  to  the  Cincinnati;  Richmond  and  Chi¬ 
cago  Company.  The  Cincinnati,  Hamilton  and  Indianap¬ 
olis  railway  connects  with  the  Cincinnati,  Hamilton  and 
Dayton  railway  at  said  Hamilton,  extends  westwardly  to 
Indianapolis,  in  Indiana,  and  is  stocked  and  worked  by  the 
Cincinnati,  Hamilton  and  Dayton  Company,  which  owns  a 
controlling  interest  in  the  stock  of  the  Cincinnati,  Hamil¬ 
ton  and  Indianapolis  Company,  to  which  it  accounts.  The 
arrangement  between  these  companies  does  not  more  spe¬ 
cifically  appear  in  the  case. 

The  most  easterly  of  the  two  lines  consists  of  three 

«/ 

parts.  The  Cleveland,  Columbus,  Cincinnati  and  Indian¬ 
apolis  railway  extends  from  Cleveland,  via  Delaware  to 
Springfield.  By  means  of  the  roads  of  other  companies 
consolidated  with  it  years  ago,  its  line  branches  westward 
at  Gabon,  crosses  the  Dayton  and  Michigan  road  at  Sidney, 
and  extends  thence  westward  to  Indianapolis,  in  Indiana. 
Its  main  line,  after  branching  at  Delaware  to  Springfield, 
extends  southwardly  to  Columbus,  Ohio.  Its  northern 
terminus  is  at  Cleveland,  and  its  three  southern  and  west- 


ern  termini  are  at  Columbus,  Springfield  and  Indianapolis. 
The  southern  part  of  this  general  line  is  the  Cincinnati  and 
Springfield  railroad,  constructed  by  the  Cincinnati  and 
Springfield  Railroad  Company,  and  extending  from  Cincin¬ 
nati  to  Dayton.  The  Dayton  terminus  of  this  road  is  con¬ 
nected  with  the  Springfield  terminus  of  Cleveland,  Colum¬ 
bus,  Cincinnati  and  Indianapolis  road,  by  using  a  part  of 
the  Springfield,  Sandusky  and  Cleveland  road.  The  line  of 
the  last  mentioned  road,  constructed  by  the  Cincinnati, 
Sandusky  and  Cleveland  Railroad  Company,  extends  from 
Sandusky,  its  northern  terminus,  via  Springfield,  to  Day- 
ton,  its  southern  terminus,  and  between  those  points 
constitutes  a  third  parallel  and  competing  line.  That 
part  of  the  last-mentioned  line  between  Dayton  and 
Springfield  is,  and  for  some  years  has  been  stocked 
and  worked  by  the  Cleveland,  Columbus,  Cincinnati 
and  Indianapolis  Company  in  connection  with  its  own 
road  from  Springfield  to  Cleveland,  and  in  connection 
with  the  Cincinnati  and  Springfield  road  between  Dayton 
and  Cincinnati.  This  is  done  under  contracts  of  substan¬ 
tially  the  same  general  character  before  mentioned  in  con¬ 
nection  with  the  Dayton  and  Michigan  road.  In  this  way 
the  more  eastern  of  the  two  through  lines  from  Lake  Erie 
to  the  Ohio  river  is  made  up. 

The  Cleveland,  Columbus,  Cincinnati  and  Indianapolis 
Company  and  the  Cincinnati,  Hamilton  and  Dayton  Com¬ 
pany,  the  former  owning  in  fee  simple  the  north  part  of  the 
eastern  through  line,  and  the  latter  owning  the  south  part 
of  the  western  through  line,  deeming  their  relations  with 
the  other  lines  connected  with  them,  as  before  stated,  equiv¬ 
alent  to  ownership  in  the  meaning  of  the  statute,  under¬ 
took  proceedings  to  consolidate  the  two  companies,  which 
are  the  proceedings  under  discussion  in  this  case. 

If  the  purpose  is  correctly  understood,  it  was  intended 


to  connect  the  two  roads  owned  in  fee  simple  by  tlie  re¬ 
spective  companies,  over  the  road  of  another  company  be¬ 
tween  Springfield  and  Dayton,  which  is  stocked  and  worked 
by  the  Cleveland,  Columbus,  Cincinnati  and  Indianapolis 
Company  under  contract  as  before  stated.  It  is  also  claimed 
by  defendants  that  the  crossing  of  the  Dayton  and  Michigan 
road  by  the  Cleveland,  Columbus,  Cincinnati  and  Indian¬ 
apolis  road,  at  Sidney,  allows  passage  of  cars  from  one  to 
the  other  in  the  manner  required  by  law  to  authorize  con¬ 
solidation.  The  Cleveland,  Columbus,  Cincinnati  and  In¬ 
dianapolis  Company  and  the  Cincinnati,  Hamilton  and 
Dayton  Company  are  the  only  companies  joining  in  the 
agreement  for  consolidation.  The  fact  of  consolidation 
between  those  two  companies,  would  carry  to  the  new 
company  all  the  assets  of  the  two  companies,  among  the 
rest,  all  the  lines  of  road  held  under  contract  by  them,  so 
far  as  their  claims  of  ownership  may  be  sustained.  The 
agreement  for  consolidation  accordingly  provides  that 
stockholders  in  the  other  four  companies  shall  surrender 
their  stock  and  the  new  company  shall  give  them  stock  in 
the  new  company,  in  equal  amounts  at  par  value  for  the 
stock  of  the  old  companies.  If  correctly  understood,  how¬ 
ever,  it  does  not  extend  to  any  part  of  the  stock  of  the 
Cincinnati,  Sandusky  and  Cleveland  Company,  from  whom 
is  held  the  contract  for  the  road  between  Dayton  and 
Springfield.  The  plan  obviously  comprises  the  consolida¬ 
tion  of  six  railroad  companies,  whose  corporate  existence 
will  be  merged  in  one  new  company.  It  will  also  hold 
that  part  of  the  road  of  another  company  which  extends 
from  Dayton  to  Springfield,  but  not  include  any  part  of  the 
stock  of  the  company  which  built  it. 

The  arrangements  between  a  number  of  the  companies 
and  the  Cincinnati,  Hamilton  and  Dayton  Company,  and 
with  the  Cleveland,  Columbus,  Cincinnati  and  Indianapolis 


Company,  have  been  in  this  statement  alluded  to  as  con¬ 
tracts  for  permanent  running  arrangements.  The  defend¬ 
ants  claim  them  to  he  perpetual  leases,  and,  on  that  idea, 
claim  ownership  of.  the  lines.  The  contracts  are  Exhibited 
in  the  case. 


ARGUMENT. 

I. 

In  order  to  restrain  abuse  of  corporate  fran¬ 
chises,  granted  in  aid  of  the  internal  carrying  trade 
of  the  United  States,  and  to  moderate  the  power  of 
monopolies  to  make  undue  exactions,  many  of  the 
States  of  the  Union,  among  the  rest,  the  State  of 
Ohio,  have  adopted  a  legislative  policy  not  to  per¬ 
mit  the  union  of  parallel  or  competing  lines  of  rail¬ 
way  in  one  and  the  same  interest,  by  aid,  lease,  pur¬ 
chase,  consolidation,  or  otherwise. 

MICHIGAN. 

“  No  railroad  corporation  shall  consolidate  its  stock, 
property,  or  franchises  with  any  other  railroad  corporation 
owning  a  parallel  or  competing  line,  and  in  no  case  shall 
any  consolidation  take  place  except  upon  public  notice 
given  of  at  least  sixty  days  to  all  stocknolders,  in  such 
manner  as  shall  be  provided  by  law.”  Constitution  1850, 
Art.  ATX,  Sec.  2. 

ILLINOIS. 

The  constitution  of  Illinois,  adopted  in  1870,  adopts, 
as  a  part  of  it,  the  same  language  as  the  constitution  of 
Michigan.  Art.  X/.,  Sec.  11,  Rev.  Statutes  of  Illinois ,  1880, 
p.  29. 

MISSOURI. 

No  railroad  or  other  corporation,  or  the  lessees,  pur¬ 
chasers,  or  managers  of  any  railroad  corporation  shall 
consolidate  the  stock,  property,  or  franchises  of  such  cor- 


poration,  with,  or  lease,  or  purchase  the  works  or  fran¬ 
chises  of,  or  in  any  way  control  any  railroad  corporation 
owning  or  having  under  its  control  a  parallel  or  compet¬ 
ing  line  ;  nor  shall  any  officer  of  such  railroad  corporation 
act  as  an  officer  of  any  other  railroad  corporation  owning 
or  having  the  control  of  a  parallel  or  competing  line. 
The  question  whether  railroads  are  parallel  or  competing 
lines  shall,  when  demanded,  be  decided  by  a  jury  as  in 
other  civil  issues.  Const,  n  of  1875,  Art.  XII.,  Sec.  17 ; 
Const1  n  of  Penn.,  Art.  XVII.,  Sec.  4. 

PENNSYLVANIA. 

The  constitution  of  1873  contains  the  same  clause, 

*  except  that  the  provision  is  extended  to  canals  as 
well  as  railroads.  The  provision  in  the  Pennsylvania 
constitution,  except  so  far  as  it  relates  to  canals,  appears 
to  have  been  copied  in  the  Missouri  constitution.  Penn. 
Const’ n ,  Art.  XVII.,  Sec.  4,  Laws  of  Penn.  1874-75,  p.  24. 

Pennsylvania  Statute. — Any  railroad  maybe  leased  to 
any  other  railroad  company,  or  enter  into  any  other  con¬ 
tract,  on  such  terms  as  may  be  agreed  : 

“ Provided ,  however ,  That  such  road  or  roads,  so  em¬ 
braced  in  any  such  lease,  assignment,  contract,  or  guar¬ 
antee,  shall  be  connected  either  directly,  or  by  means  of 
intervening  line ,  with  the  railroad  or  railroads  of  said  com¬ 
pany  or  companies  of  this  commonwealth  so  entering  into 
such  lease,  assignment,  contract,  or  guarantee,  and  thus 
forming  a  continuous  route  or  routes  for  the  transporta¬ 
tion  of  persons  and  property.”  Laws  of  1870,  p.  31, 
Sec.  1. 

NEW  HAMPSHIRE. 

The  statute  forbids,  under  penalties,  one  railroad  com¬ 
pany,  its  directors,  officers,  or  agents,  to  control  a  rival 
line,  or  consolidate  with  it  ;  and  authorizes  any  citizen  to 
apply  to  the  Supreme  Court,  or  any  justice  thereof,  for 
an  injunction,  when  the  law  in  this  respect  is  violated. 
New  Hampshire  Statutes ,  Revision  of  1878,  Chap.  158,  Secs. 
11,  12,  13,  pp.  377,  378. 

MARYLAND. 

No  railroad  company  to  purchase  or  lease  the  road 
of  another  or  consolidate  with  it,  or  any  j:>art  of  it,  “  with- 


out  the  authority  of  an  act  of  the  General  Assembly  . 

first  had  and  obtained.”  Rev.  Statutes  of  Maryland,  1878, 
Sec.  21,  p.  359. 

MINNESOTA. 

“Whenever  the  lines  of  railroad  of  any  railroad  cor- 
poration,  .  .  .  or  any  portion  of  such  lines,  have  been 

or  may  be  constructed  so  as  to  admit  the  passage  of 
freight  or  passenger-cars  over  any  two  or  more  of  such 
roads  continuously  without  break  or  interruption.”  Stat. 
at  Large,  1873,  Bissell,  pp.  427,  428.  Other  parts  of  act 
like  ours. 

TEXAS. 

“  No  railroad  corporation,  or  the  lessees  or  purchasers 
or  managers  thereof,  shall  consolidate  the  stock,  property, 
or  franchises  of  such  corporation  with,  or  lease  or  pur¬ 
chase  the  works  or  franchises  of,  or  in  any  way  control 
any  railroad  corporation  owning,  or  having  under  its  con¬ 
trol,  a  parallel  or  competing  line;  nor  shall  any  officer  of 
such  railroad  corporation  act  as  an  officer  of  any  other 
railroad  corporation  owning  or  having  control  of  a  com¬ 
peting  or  parallel  line.”  Rev.  Stat.  1879,  p.  610,  Art. 
4246. 

WEST  VIRGINIA. 

No  railroad  corporation  shall  consolidate  its  capital 
stock  with  any  other  railroad  running  a  parallel  or  com¬ 
peting  line  without  the  consent  of  the  legislature,  but  any 
railroad  may  merge,  or  consolidate  with,  or  lease  its  rail¬ 
road  for  a  term  of  years,  to  any  corporation  owning  or 
operating  any  connecting  line  of  railroad  wholly  or  partly 
within  this  State,  in  order  to  make  a  continuous  line  of 
railroad,  etc.  Rev.  Stat.  1879,  Vol.  2,  p.  948,  Sec.  23. 


IOWA. 

It  shall  be  unlawful  for  any  railway  company  to  make 
any  contract,  or  enter  into  any  stipulation  with  any  other 
railway  company  running  in  the  same  general  direction, 
by  which  either  company  shall,  directly  or  indirectly, 
agree  to  divide  in  any  manner  or  proportion  the  joint 
earnings  upon  the  whole  or  any  part  of  the  freight  trans¬ 
ported  over  such  roads,  etc.  McClain's  Annotated  Stat¬ 
utes,  1880,  Vol.  1,  p.  356,  Sec.  1297. 


MAINE. 


No  corporation  can  assign  its  charter  or  any  rights 
under  it;  lease  or  grant  the  use  or  control  of  its  road  or 
of  any  part  of  it;  or  divest  itself  thereof,  without  consent 
of  the  legislature.  Rev.  Stat.  1871,  Secs.  26,  23,  p.  453. 

WISCONSIN. 

Railroad  companies  may  consolidate  when  “con¬ 
structed  wholly  or  in  part,  which,  when  completed  and 
connected,  will  form  in  the  whole  or  in  the  main  one  con¬ 
tinuous  line  of  railroad ,  .  .  .  provided,  .  .  .  not 

be  construed  to  authorize  the  consolidation  of  any  railroad 
companies  or  roads,  except  wiien  by  such  consolidation  a 
continuous  line  of  roads  is  secured,  running  in  the  whole 
or  in  the  main  in  the  same  general  direction,  and  not  law¬ 
ful  when  by  so  doing  it  will  deprive  the  public  of  the 
benefit  of  competition  between  said  roads.”  Rev.  Stat. 
1879,  p.  134. 

KANSAS. 

Any  two  or  more  railroad  companies,  which  when 
completed  and  connected,  will  form  a  continuous  line  or 
lines  of  railroad,  may  consolidate. 

So,  any  railroad  company  may  lease  its  road  to  any 
other  railroad  company  whose  line  of  road  shall  so  connect 
with  the  leased  road  as  to  form  a  continuous  line.  Com¬ 
piled  Raws  of  Kansas ,  1881,  Chap.  84,  Secs.  47-49,  p.  787. 

NEBRASKA. 

Every  railroad  company  wdiose  railroad  or  railroads, 
constructed  or  to  be  constructed  within  this  State,  shall 
be  so  situated  wfith  reference  to  any  railroad  constructed 
or  to  be  constructed  through  any  adjoining  State,  .  .  . 

that  the  same  may  be  so  connected,  .  *  .  by  bridge, 

ferry,  or  otherwise,  as  to  practically  form  a  continuous  line 
of  railway  over  which  cars  may  pass,  may  purchase  the 
connecting  line  or  sell  to  it.  Statutes  of  Nebraska ,  com¬ 
pilation  of  1881,  pp.  304,  305. 

NEW  YORK. 

Whenever  twro  or  more  railroads  of  the  companies  to 
be  so  consolidated  shall  or  may  form  a  continuous  line  of 


[  10  ] 


railroad  with  each  other,  or  by  means  of  an  intervening 
railroad ,  bridge ,  or  ferry  (7  N.  Y.  Statutes  at  Large ,  pp. 
529,  530).  A  supplemental  act  provides  that  in  any  case 
•where  two  or  more  railroad  companies  shall  have  been,  or 
shall  hereafter  be,  organized  under  the  general  laws  of 
this  state,  the  whole  of  whose  lines,  as  located  by  them  re¬ 
spectively i,  shall  form  one  continuous  and  connecting  line  of 
road,  the  said  companies  may  consolidate  their  lines  of 
road,  stock,  franchises,  and  property  according  to  the  ex¬ 
isting  laws  of  this  state  relating  to  the  consolidation  of 
railroad  companies.  General  Statutes ,  1875,  p.  24,  Chap. 
108. 

INDIANA. 

The  Act  of  March  3,  1805  (1  Davis’  St.  728),  provides 
for  the  judicial  sale  of  railroads  under  deeds  of  trust  or 
mortgages,  where  the  road  lies  part  in  that  state  and  part 
in  another,  as  an  entirety;  also,  of  road  lying  wholly  in 
that  state  ;  authorizes  the  purchasers  or  assigns  to  become 
incorporated,  etc.,  and  gives  the  new  company  power  “ to 
consolidate  with  other  railroad  corporations  in  the  continuous 
line ,  either  within  or  without  this  state,  upon  such  terms 
as  may  be  agreed  upon  by  the  corporations  owning  the 
same.”  Such  corporation  may  also  acquire,  by  purchase 
or  contract,  the  road,  etc.,  of  'any  other  railroad  corporation 
which  may  cross  or  intersect  its  line ;  but  expressly  limits 
the  acquisition  in  Indiana  to  such  roads  as  may  cross  and 
intersect  its  line,  and  which  have  not  been  equipped  and 
operated  in  whole  or  in  part. 

Other  acts  authorize  the  connection  of  lines,  in  Special 
cases,  and  the  joint  use  of  the  same  line  by  different  com¬ 
panies.  Act  of  Alar  eh  3,  1865  (1  Davis  Stat.  1879,  p.  717). 

Another  statute  (Davis  Stat.  1876,  p.  717)  provides 
that  any  company  shall  have  power  to  intersect,  join,  and 
unite  thfdr  railroad  with  any  other  railroad,  constructed 
or  in  progress  of  construction  in  this  state,  or  in  any  ad¬ 
joining  state,  at  such  point  on  the  state  line  or  at  any 
other  point  as  may  be  mutually  agreed  upon  by  said  com¬ 
panies;  and  such  railroad  companies  are  authorized  to 
merge  and  consolidate  the  stock  of  the  respective  compa¬ 
nies,  making  one  joint  stock  company  of  the  two  railroads 
thus  connected,  upon  such  terms  as  may  be  by  them  mu¬ 
tually  agreed  upon,  in  accordance  with  the  laws  of  the  ad- 


[  11  ] 


joining  state  with  whose  road  or  roads  connections  are  thus 
formed :  Provided  their  charters  authorize  said  railroad^ 
to  go  to  the  state  line,  or  to  such  point  of  intersection. 

REVISED  STATUTES  OF  OHIO,  1880. 

Sec.  3300.  “Any  company  may  aid  another  in  the 
construction  of  its  road,  by  means  of  subscription  to  the 
capital  stock  of  such  company,  or  otherwise,  for  the  pur¬ 
pose  of  forming  a  connection  of  the  roads  of  the  compa¬ 
nies,  when  the  road  of  the  company  so  aided  does  not  form  a 
competing  line ;  any  company  may  lease  or  purchase  any 
part  or  all  of  a  railroad  constructed  by  another  company, 
if  the  lines  of  such  company  are  continuous  or  connected ,  and 
not  competing ,  upon  such  terms  and  conditions  as  may  be 
agreed  upon  between  the  companies;  and  any  two  or 
more  companies,  whose  lines  are  so  connected  and  not  com¬ 
peting^  may  enter  into  any  arrangement  for  their  common 
benefit  consistent  with  arid  calculated  to  promote  the  ob¬ 
jects  for  which  they  wrere  created.” 

Sec.  3368.  Any  company  whose  road  forms  part  of 
any  line  of  railway  between  points  common  to  any  other 
line  shall  not  contract  or  agree  with  any  person,  or  with 
any  other  railroad  company  or  companies,  having  a  road 
or  line  of  roads,  or  forming  a  part  of  any  line  of  roads 
between  the  same  points,  not  to  carry  freight  or  passen¬ 
gers  to  or  from  such  common  points,  nor  shall  it  refuse  to 
receive  or  carry  any  freight  or  passengers  brought  to  it 
to  be  so  carried. 

Sec.  3379.  “When  the  lines  of  road  of  any  railroad 
companies  in  this  state,  or  any  portion  of  such  lines,  have 
been  or  are  being  so  constructed  as  to  admit  the  passage 
of  burden  or  passenger  cars  over  any  two  or  more  of  such 
roads  continuously,  without  break  or  interruption,  such 
companies  may  consolidate  themselves  into  a  single  com¬ 
pany.” 

Sec.  3380.  “A  company  organized  in  this  State,  and 
whose  line  of  road  is  made,  or  is  in  process  of  construc¬ 
tion,  to  the  boundary  line  of  the  state,  or  to  any  point 
either  in  or  out  of  the  state,  may  consolidate  its  capital 
stock  with  the  capital  stock  of  any  company  in  an  ad¬ 
joining  state,  the  line  of  whose  road  has  been  made  or  is 
in  process  of  construction  to  the  same  point,  when  the 


[  12  1 


several  roads  so  united  will  form  a  continuous  line  for  the 
,  passage  of  cars  ;  and  roads  running  to  the  bank  of  a  river 
which  is  not  bridged  shall  be  held  to  be  continuous,  under 
this  section.” 

In  Taylor  v.  Atlantic  and  G-reat  Western  Railroad  Co., 
57  How.  Pr.  (Y.  Y.)  26,  Mr.  Justice  Daniels,  delivering  the 
opinion,  referred  to  the  statute  authorizing  consolidation 
of  railroads,  and  said  : 

“  It  may  be,  as  it  should  be,  conceded  at  the  threshold 
of  the  discussion  that  corporations,  railroads  as  well  as 
others,  must  be  confined  in  their  acts  within  the  limits  of 
the  authority  affirmatively  given  to  them  or  appropriately 
requisite  for  the  attainment  of  the  objects  they  are  de¬ 
signed  to  accomplish  ;  and  under  the  effective  operation  of 
this  principle  for  whatever  they  do,  some  warrant  of  legal 
authority  must  be  found.  The  principle  is  salutary,  and 
its  observance  should  be  watched  and  guarded,  in  order  to 
prevent  corporations  from  becoming  what  they  are  so  often 
inclined  to  become,  unrestrained  and  destructive  monopo¬ 
lies  of  individual  enterprise.  But  if,  with  that  restriction, 
their  acts  appear  authorized,  then  they  are  to  be  sus¬ 
tained,  the  same  like  all  other  exertions  of  lawful  au¬ 
thority.” 

The  first  general  act  of  Ohio  authorizing  consolida¬ 
tion  of  railway  companies  was  the  act  of  March  3,  1851 
(2  Curwen,  1656,  1657),  when  constructed,  etc.,  “  so  as  to 
admit  the  passage  of  burden  or  passenger  cars  over  any  two  or 
more  of  such  roads  continuously,  without  break  or  interrup¬ 
tion .”  The  act  of  May  1,  1852,  so  far  as  it  referred  to 
consolidation,  was  the.  same  as  the  act  of  1851  (3  Curwen, 
1882-4).  The  act  of  1851  applied  to  companies  under 
previously  existing  special  laws  ;  the  act  of  1852  was  the 
general  railroad  act  under  the  then  new  constitution. 

The  consolidation  clauses  of  the  acts  of  1851  and  1852 
referred  only  to  railroad  companies  “  in  this  state.”  The 


[  13  ] 


act  of  April  10,  1856  (4Curwen,  2791),  referred  to  railroad 
companies  in  this  state  whose  lines  of  road  “shall  be  made 
or  in  process  of  construction  to  the  boundary  line  of  the 
state,  or  to  any  point  either  in  or  out  of  the  state  and  au¬ 
thorized  them  to  consolidate  their  stock  with  the  capital 
stock  of  “  any  railroad  in  an  adjoining  state,  the  line  of 
whose  road  has  been  made  or  is  in  process  of  construction 
to  the  same  point,  and  where  the  several  roads  so  unite  as 
to  form  a  continuous  line  for  the  passage  of  cars ;  provided, 
that  roads  running  to  the  bank  of  any  river  which  is  not 
bridged  shall  be  held  to  be  continuous  under  this  act.” 

The  language  of  this  act  did  not  require  that  the  un¬ 
bridged  river  spoken  of  should  be  on  the  state  line  or  in 
another  state.  It  left  a  possible  implication  that  consoli¬ 
dation  between  Ohio  companies  might  not  be  held  to  form 
a  continuous  line,  if  the  two  were  separated  by  an  un¬ 
bridged  river,  because  the  provision  for  consolidating  do¬ 
mestic  companies  contained  no  such  proviso. 

The  act  of  May  6,  1869  (8  Sayler,  1872),  united  the 
provisions  for  consolidating  Ohio  lines  of  road  in  the  state, 
with  the  provision  for  consolidation  of  Ohio  lines  with 
lines  of  another  state,  in  a  single  section  ;  and  added  the 
same  proviso  as  to  unbridged  rivers,  in  a  way  to  make  it 
equally  applicable  to  both. 

The  earlier  acts  authorizing  one  railroad  company  to 
aid,  lease,  or  purchase  another  were  in  accordance  with  the 
same  policy,  but  in  language  less  carefully  guarded. 

THE  ACT  OF  APRIL  15,  1873. 

Sec.  1  limits  the  right  to  aid  to  cases  “where  the  road 
so  to  be  aided  does  not  form  a  competing  line;”  and  the 
right  to  lease  or  purchase  to  cases  where  said  “  lines  are 
continuous  or  connected,  and  not  competing ;”  “  or  any  two 
or  more  railroad  companies  whose  lines  are  so  connected, 
and  not  competing,  may  enter  into  any  arrangement  for 
their  common  benefit,”  etc.  (4  Curwen,  2950-1.) 


[  14  ] 

In  the  revision,  the  provisions  relating  to  the  consol¬ 
idation  of  roads  owned  by  Ohio  companies  with  each  other, 
and  the  consolidation  with  roads  owned  by  companies  of 
another  state,  are  separated  again  into  two  sections,  leaving 
the  piroviso  relating  to  unbridged  rivers,  by  a  strict  literal 
construction,  applicable  only  to  Ohio  companies  consoli¬ 
dated  with  companies  of  other  states.  I  presume  the 
change  was  inadvertent,  and  that  the  principle  applies 
which  was  decided  in  State  v.  Comm’rs,  ete .,  36  Ohio  St.  327  : 

“  Where  an  act  of  the  legislature,  or  several  acts  in 
pari  materia ,  have  undergone  revision,  the  same  construc¬ 
tion  will  prevail  as  before  revision,  unless  the  language  of 
the  new  act  plainly  requires  a  change  of  construction,  to 
conform  to  the  manifest  intent  of  the  legislature.” 


II. 

The  several  provisions  of  the  Revised  Statutes 
of  Ohio,  relating  to  aiding,  leasing,  purchasing,  or 
consolidating  railway  corporations;  or  to  contracts 
between  companies  not  to  compete  with  each  other, 
are  all  directed  to  the  same  mischief,  are  in  pari 
materia ,  and  should  be  construed  as  consistent  with 
each  other. 


III. 

Section  3300  of  the  Revised  Statutes,  based 
upon  a  fundamental  principle  of  the  law  of  cor¬ 
porations,  that  “  the  powers  of  a  corporation  organ¬ 
ized  under  a  legislative  charter  are  only  such  as 
the  statute  confers,  and  the  enumeration  of  them 
implies  the  exclusion  of  others,”  Thomas  v.  Bail- 
road  Co .,  11  Otto,  71,  gives  authority  to  aid,  lease, 
or  purchase,  only  when  not  competing;  but  as  there  are 


[  15  ] 


several  other  ways  of  violating  the  policy  of  the 
law,  the  section  closes  with  a  sweeping  clause  which 
covers  the  entire  policy :  “Any  two  or  more  compa¬ 
nies  whose  lines  are  so  connected  and  not  competing ,  may 
enter  into  any  arrangement  for  their  common  bene¬ 
fit  consistent  with  and  calculated  to  promote  the 
objects  for  which  they  were  created.”  Nothing  is 
permitted  which  unites  competing  roads  under  con¬ 
trol  of  the  same  interest. 


IV. 

Sections  3368,  3369,  3379,  3380  are  specific  as  to 
such  of  the  transactions  covered  by  the  general  clause 
at  the  close  of  Section  3300,  as  are  most  likely  to 
be  resorted  to  in  evasions  of  the  general  policy ; 
but  these  sections  do  not  change  or  infringe  upon 
the  policy,  nor  do  they  attempt  to  enumerate  every 
thing  to  which  it  applies ;  such  as  pooling  earnings 
and  other  devices.  The  policy  is  a  broad  one,  and 
probably  no  railroad  company  has  legal  power  to 
infringe  it  by  any  device  whatever. 


V. 

The  sections  allowing  consolidation  limit  it  to 
instances  where  the  roads  are  so  constructed  or  de¬ 
signed  “as  to  admit  the  passage  of  burden  or  pas¬ 
senger  cars  over  any  two  or  more  of  such  roads  con¬ 
tinuously  /”  that  is  to  say,  over  all  the  lines  to  be 
consolidated,  “  without  break  or  interruption,”  or  to 
lines  “  when  the  several  roads  so  united  will  form  a  con¬ 
tinuous  line  for  the  passage  of  cars.”  The  two  forms 
of  expression  mean  the  same  thing  and  explain  each 


[  16  ] 


other.  JSTo  matter  how  many  roads  there  may  be, 
they  must  form  a  continuous  line  over  which  cars 
may  pass  from  one  end  to  the  other  without  break 
or  interruption. 

The  phrase  in  Sec.  3379,  “when  the  lines  of  any  rail¬ 
road  companies  in  this  state,  or  any  portion  of  such  lines 
have  been  or  are  being  so  constructed,”  refers  to  the 
time  when  the  consolidation  takes  place.  It  may  take 
place  before  either  line  is  completed.  But  in  addition  to 
part  or  complete  construction,  the  situation  and  plan  must 
be  so  as  to  “  admit  the  passage  df  burden  or  passenger  cars 
over  any  two  or  more  of  such  roads  continuously,  without 
break  or  interruption.”  In  Sec.  3380,  the  consolidation  is 
permitted  “  when  the  several  roads  so  united  will  form  a  con¬ 
tinuous  line  for  the  passage  of  cars.” 

The  proviso  concerning  unbridged  rivers  indicates  that 
the  passage  of  cars  was  intended  to  be  onwards  in  the  same 
general  direction,  as  implied  in  the  formation  of  a  continu¬ 
ous  line.  I  apprehend  that  the  continuity  of  line,  when 
consolidated,  was  to  be  the  same  iii  all  cases.  The  con¬ 
tinuity  of  line  was  more  fully,  but  I  conceive  not  differ¬ 
ently,  described  in  the  act  of  March  19,  1869:  “form  part 
of  a  continuous  line  of  road  from  a  point  in  one  of  the 
states  of  the  United  States  into  this  state  or  through  this 
state  to  a  point  in  another  state.”  3  Sayler,  1760,  1761. 

The  provision  is  substantially  the  same  as  that  in  the 
constitutions  of  Michigan  and  Illinois,  forbidding  consoli¬ 
dation  with  “  any  other  railroad  corporation  owning  a  par¬ 
allel  or  competing  line.”  The  constitutions  of  Pennsyl¬ 
vania  and  Missouri  extend  the  prohibition  to  as  great 
breadth  as  the  prohibitions  in  sections  3368,  3369,  3300,  3379, 
3380  of  our  Kevised  Statutes.  The  same  appears  to  be 


[  17  ] 


true  of  the  Wisconsin  statute  before  quoted  :  “  When  by 
such  consolidation  a  continuous  line  of  roads  is  secured, 
running  in  the  whole  or  in  the  main  in  the  same  general  direc¬ 
tion ,  and  not  lawful  when  by  so  doing  it  will  deprive  the 
public  of  the  benefit  of  competition  between  said  roads.” 

In  the  act  of  West  Virginia,  before  quoted,  the  con¬ 
solidation  of  parallel  or  competing  lines  is  forbidden  gen¬ 
erally,  but  permitted  to  “  any  corporation  owning  or  oper¬ 
ating  any  connecting  line  of  railroad  wholly  or  partly 
within  this  state,  in  order  to  make  a  continuous  line  of  rail-, 
road”  etc.  Parallel  or  competing  lines  are  contrasted  with 
“  continuous  ”  lines. 

In  the  act  of  Iowa,  before  quoted,  it  is  made  unlawful 
for  any  railroad  company  to  “  make  any  contract  or  enter 
into  any  stipulation  with  any  other  railway  company  running 
in  the  same  general  direction  ”  etc.  The  prohibition  in  the 
Hew  Hampshire  act  refers  to  “  rival”  lines.  They  all  aim 
at  the  same  mischief,  and  the  different  terms  used  express, 
more  or  less  circumstantially,  the  same  policy. 

The  phrase  “  continuous  line  v  is  much  used.  I  appre¬ 
hend  that  it  does  not  suggest,  either  to  the  popular  mind 
or  to  any  class  of  persons,  learned  or  ignorant,  the  idea  of 
any  two  or  three  sides  of  a  triangle  or  of  a  square  ;  or  of  a  line 
turning  back  upon  its  own  general  course,  so  as  to  dupli¬ 
cate  the  means  of  communication  between  the  same  termini. 
Webster’s  Unabridged  Dictionary  says: 

“Continuous:  1.  Without  break,  cessation,  or  inter¬ 
ruption  ;  constantly  prolonged  ;  protracted;  extended;  as 
a  continuous  line  of  railroad;  a  continuous  current  of 
electricity;  continuous  depth.  2.  Hot  deviating  or  vary¬ 
ing  from  uniformity;  not  interrupted. 

Syn.  :  Continuous,  continual.  Continuous  is  the 
stronger  word,  and  denotes  that  the  continuity  or  union 
'  of  parts  is  absolute  and  uninterrupted;  as  a  continuous 
sheet  of  ice;  a  continuous  flow  of  argument.  Continual, 


[  18  ] 

in  most  cases,  marks  a  close  and  unbroken  succession  of 
things,  rather  than  absolute  continuity.  Thus  we  speak 
of'  continual  showers,  implying  a  repetition,  with  occa- 
sional  interruptions  ;  we  speak  of  a  person  as  liable  to 
continual  calls,  or  as  subject  to  continual  applications  for 
aid,  etc.  To  say  it  rained  continually  during  the  day 
would  not  of  necessity  imply  that  there  was  no  intermis¬ 
sion  whatever;  to  express  that,  we  should  be  apt  to  use 
the  word  continuously .  .  .  . 

Continuously ,  adv.  In  a  continuous  manner,  without 
interruption. 

Worcester  Unabridged.  Continuous  :  1.  Joined 

together  closely,  or  without  chasm  or  interruption  ;  con¬ 
nected,  continued.  2.  Without  deviation  from  uniformity; 
opposed  to  interrupted. 

Syn.  :  Continual  is  that  which  is  constantly  renewed 
and  recurring,  with  perhaps  frequent  stops  or  interrup¬ 
tions  ;  continuous  or  continued ,  that  which  is  unintermitted 
or  uninterrupted. 

Section  3300  allows  “  any  company”  to  aid  another  in 
the  construction  of  its  road,  for  the  purpose  of  forming  a 
connection  of  the  roads  of  the  companies  when  the  road 
of  the  company  so  aided  “  does  not  form  a  competing  line” 
or  to  lease  or  purchase,  “  if  the  lines  of  such  company  are 
continuous ,  or  connected  and  not  competing ;”  and  any  two  or 
more  companies,  “  whose  lines  are  so  connected  and  not  com¬ 
peting ’,  may  enter  into  any  arrangement  for  their  common 

% 

benefit  consistent  with  and  calculated  to  promote  the  ob¬ 
jects  for  which  they  were  created.” 

This  propounds  a  comprehensive  policy,  which  is  car¬ 
ried  out  and  not  contradicted  by  any  of  the  other  sections. 
I  have  endeavored  to  show  that  the  other  sections,  con¬ 
strued  by  themselves,  so  far  as  they  go,  express  the  same 
policy.  If,  however,  the  construction  of  Secs.  3379,  3380 
were  more  doubtful  than  I  suppose  it  to  be,  they  should  be 
construed  as  in  pari  materia  with  Secs.  3368,  3369,  3300.  No 
reason  can  he  imagined  why  the  benefits  to  the  public  of 


[  19  ] 


competing  lines  should  be  so  stringently  secured  and 
guarded  by  Secs.  8300,  3368,  3869,  and  not  equally  secured 
and  guarded  in  Secs.  3379,  3380. 

Consider  what  other  construction  is  possible.  Unless 
you  so  construe  Sec.  3379  as  in  effect  to  deny  any  meaning 
whatever  to  the  phrase  “  continuously ,  without  break  or  in¬ 
terruption,”  and  to  deny  any  meaning  in  Sec.  3380  to  the 
phrase,  “#when  the  several  roads  so  united  will  form  a  con¬ 
tinuous  line  for  the  passage  of  cars,”  the  right  would  be 
given  to  consolidate  all  railroads  having  the  same  gauge, 
which  are  connected  in  the  ordinary  way  by  side-tracks, 
turn-tables,  or  other  devices. 

The  proviso  relating  to  unbridged  rivers  has  been  re¬ 
ferred  to.  I  am  not  aware  that  any  river  in  the  state ,  as 
distinguished  from  a  river  on  the  border,  say  the  Ohio 
river,  crossed  by  a  line  of  railway,  is  now  or  was,  when  any 
of  the  railway  acts  were  passed,  unbridged.  I  have  al¬ 
luded  to  the  proviso  as  furnishing  an  indication  that  the 
lines  permitted  to  be  consolidated  were  such  as,  when 
united,  would  make  one  continuous  line,  running  in  the 
same  general  direction. 

But  this  proviso  shows  the  force  of  the  clause  relating 
to  the  passage  of  cars  from  one  road  to  the  other,  “  without 
break  or  interruption”  The  break  or  interruption  occasioned 
by  an  unbridged  river  was,  in  the  opinion  of  the  legisla¬ 
ture,  a  thing  which  would  interrupt  the  intended  continuity 
of  lines,  unless  especially  provided  for. 

In  the  Yew  York  statute,  before  quoted,  the  consoli¬ 
dating  roads  are  required  to  “  form  a  continuous  line  of 
railroad  with  each  other,  or  by  means  of  an  intervening  rail¬ 
road ,  bridge ,  or  ferry.”  7  Statutes  at  Large,  529,  530. 

In  the  Pennsylvania  statute,  before  quoted,  the  roads 
“  shall  be  connected,  either  directly  or  by  means  of  inter¬ 
vening  line.”  Laws  of  1870,  p.  31,  sec.  1. 


« 


[  20  ] 


In  the  Nebraska  act,  before  quoted,  the  railroads  are 
required  to  be  so  situated  with  reference  to  each  other  u  that 
the  same  be  so  connected  ...  by  bridge,  ferry,  or  otherwise, 
as  to  practically  form  a  continuous  line  of  railway.”'  Statutes 
of  Nebraska  of  1881,  p.  304-5. 

If  the  legislature  intended  to  permit  all  companies  to 
consolidate  whose  lines  are  of  the  same  gauge,  it  would 
have  been  an  easy  thing  to  express  the  purpose.  The  re¬ 
quirements  of  their  own  business  would  have  provided 
ample  guaranty  against  delays  from  breaks  and  interrup¬ 
tions. 

YI. 

By  Sec.  5381,  the  steps  therein  prescribed  to 
bring  about  consolidation  are  declared  to  be  “  condi¬ 
tions  and  restrictions,”  and  are  thus  placed  on  the 
same  legal  footing  with  the  preliminary  steps  in 
forming  other  railroad  corporations. 


VII. 

y 

The  first  step  in  every  case  is  a  joint  agreement 
between  the  directors  of  every  corporation  with  the 
directors  of  each  and  every  other  corporation  in  the 
contemplated  consolidation,  “prescribing  the  terms 
and  conditions  thereof.”  Such  an  agreement  must 
specify  the  lines  of  road,  and  the  corporations  to  be  in¬ 
cluded  in  it.  Among  other  requisites,  the  agreement 
must  u prescribe  the  number  of  directors  and  other 
officers”  of  the  new  company  “and  their  places  of 
residence .” 


[  21  ] 


VIII. 

The  agreement,  so  made,  shall  he  submitted  to 
the  stockholders  of  each  of  the  corporations,  at  a 
meeting  thereof  called  separately  for  the  purpose  of 
taking  the  same  into  consideration,  due  notice  of  the 
meeting  and  object  of  it  having  been  given  as  speci¬ 
fied  in  the  statute.  A  vote  by  ballot  shall  be  taken 
for  the  adoption  or  rejection  of  the  agreement,  each 
share  of  stock  on  which  has  been  paid  all  the  install¬ 
ments  called  for  bv  the  boards  of  directors,  entitling* 
the  holder  of  it  to  one  vote. 


IX. 

If  two-thirds  of  all  the  votes  cast  at  each  separate 
meeting  be  for  the  adoption  of  the  agreement,  that 
fact  shall  be  certified  thereon  by  the  secretary  of  each 
of  the  corporations,  and  the  agreement  so  adopted  or 
a  certified  copy  thereof,  shall  be  filed  in  the  office  of 
the  Secretary  of  State. 


X. 

Xot  until  the  agreement  is  so  made  and  per¬ 
fected,  and  the  same  or  a  copy  thereof  filed  with  the 
Secretary  of  State,  shall  the  several  corporations  par¬ 
ties  thereto,  be  deemed  or  taken  to  be  one  corporation, 
etc.,  etc. 

It  is  incumbent  on  thq  defendants  to  maintain  two 
propositions;  failing  in  either  of  which,  the  case  must  be 
decided  against  them,  viz  : 

First.  They  must  show  that  the  companies  and  the 
lines  of  road  are  such  as  can  lawfully  be  consolidated ;  and, 


[  22  ] 


Second,  that  the  proceedings  taken  have  been  regular,  and 
such  as  the  law  requires  for  that  purpose. 

First.  The  agreement  on  which  the  pretext  of  consoli¬ 
dation  is  based  does  not  answer  either  branch  of  the  in¬ 
quiry. 

The  agreement  recites  that  the  Cleveland,  Columbus, 
Cincinnati,  and  Indianapolis  Railway  Company,  party  of 
the  first  part,  owns  and  operates  aline  of  railway  extending 
from  Cleveland  to  Dayton,  and  several  other  lines  of 
railway  and  branches. 

That  the  Cincinnati,  Hamilton  and  Dayton  Railroad 
Company,  party  of  the  second  part,  owns  and  operates  a 
line  of  railway  extending  from  the  city  of  Dayton  to  the 
city  of  Cincinnati,  and  several  branches  and  other  lines. 

No  other  or  further  description  is  given  of  the  lines 
and  branches  owned  by  either  company. 

It  further  recites  that  the  lines  of  the  said  parties  are 
connected  at  the  city  of  Dayton,  not  saying  which  of  the 
lines,  or  whether  all  of  them,  or  how  many ;  and  that  they 
admit  of  the  passage  of  trains  of  cars  from  and  over  each 
others  railway  (which  of  them  or  whether  alj  of  them,  not 
stated),  and  thus  form  a  continuous  line  from  Cleveland  to 
Cincinnati. 

Then  it  recites  that  the  “  said  companies  do  hereby 
agree,  and  each  for  itself  does  agree,  that  the  said  two 
companies,  and  they  are  hereby  merged  and  consolidated 
into  and  form  one  corporation.” 

How  much  is  included  in  the  consolidation?  Each 
company  had  recited  its  ownership  of  a  line  of  railway, 
and  several  other  lines  and  branches. 

As  consolidation  consists  in  a  consolidation  of  the  stock, 
and  as  the  two  companies  allege  that  they  own  all  the  roads 
and  branches,  the  consolidation  purports  in  the  agreement 


[  23  ] 

to  consolidate  all  the  stock  which  represents  all  the  roads 
and  branches.  / 

By  article  fourth ,  it  .declares  that  the  capital  stock  of 
the  new  company  shall  be  $20,000,000  ;  and  provides  that 
$18,500,000  of  the  amount  shall  be  exchanged,  share  for 
share,  for  the  stock  “  of  the  companies  consolidated,”  and 
the  stock  “  of  either  of  the  companies  ”  forming  or  merged, 
into  “either  of  said  corporations  that  is  to  say,  forming 
or  merged  into  either  of  the  contracting  companies.  That 
such  stock,  both  of  the  contracting  companies  and  of  the 
companies  “forming  or  merged  into  ”  either  of  them,  shall 
be  deemed  stock  in  the  contracting  companies,  entitling 
“  the  holders  thereof  to  vote  and  receive  dividends  accord¬ 
ing  to  their  par  value.” 

When  to  be  deemed?  Ho  future  time  is  fixed.  The 
time  for  this  provision  to  take  effect  is  when  the  contract 
is  so  executed  as  to  bind  the  contracting  parties. 

By  whom  deemed?  By  the  parties  to  the  contract. 

They  were  to  be  deemed  suchf  until  the  consolidated 
company  shall  be  ready  to  issue  new  shares  therefor,  and 
shqJl  have  given  thirty  days’  notice,”  etc.  When  were 
new  shares  to  be  issued?  The  contract  answers — “forth¬ 
with,  after  such  consolidation  shall  be  perfected.”  When 
the  share-holders  of  the  companies  other  than  the  contract¬ 
ing  companies  shall  have  received  the  new  stock,  they  will 
no  longer  be  taken  and  deemed  share-holders,  but  will  in 
fact  be  such.  Between  the  making  of  the  contract  and 
the  readiness  to  issue  new  stock  they  were  not  in  fact  or 
law  share-holders  in  the  contracting  companies,  but  deemed 
such,  and  allowed  to  vote. 

If  the  share-holders,  so  “  deemed,”  had  offered  to 
vote  at  the  meetings  of  stockholders,  called  to  consider 
the  agreement  as'  made  by  the  directors  of  the  two  con¬ 
tracting  companies,  how  could  their  votes  have  been  re- 


[  24  ] 


fused  ?  Perhaps  it  might  have  been  said  that  the  contract 
did  not  go  into  effect  until  approved  by  stockholders  of  the 
two  contracting  companies,  and. was  certified  and  filed 
with  the  Secretary  of  State.  But  assuredly  their  interests 
were  as  much  involved  in  the  vote  at  those  meetings  as 
they  ever  will  be.  The  objection,  however,  if  any  was 
made,  would  not  hold  to  their  voting  at  the  meeting  held 
in  Cleveland  for  the  election  of  directors,  or  to  their  being 
elected  to  office.  The  agreement  provides  for  them  to  vote 
before  the  new  stock  is  issued. 

The  thing  here  important,  however,  is  the  provision 
for  an  indefinite  number  of  nameless  and  shadowy  corpora¬ 
tions,  with  an  indefinite  amount  of  stock,  to  be  treated  as 
the  stock  of  the  contracting  parties,  and  to  be  consolidated 
with  the  rest. 

If  the  nameless  corporations  had  in  fact  been  merged 
into  or  consolidated  with  the  contracting  companies  there 
would  have  been  no  such  stock  to  exchange. 

In  article  fifth  of  the  agreement  the  same  proceeding 
of  an  exchange  of  stock  between  the  new  company  and 
an  indefinite  number  of  unnamed  companies  is  carried  for¬ 
ward.  “  Every  stockholder  in  each  of  the  said  compa¬ 
nies,  or  in  either  of  the  companies  forming  said  corpora¬ 
tion  hereby  consolidated,”  etc. 

By  Article  Seventh  the  agreement  provides  that  : 

u  Upon  the  making  and  perfecting  of  the  agreement 
and  ratification  thereof  by  two-thirds  of  all  the  votes  of  all 
the  stockholders  of  the  respective  companies  parties  hereto, 
and  upon  the  filing  of  the  same,  or  a  copy  thereof  in  the 
manner  prescribed  by  law,  the  parties  hereto  shall  be 
deemed  and  taken  to  be  one  corporation  by  t'he  name  pro¬ 
vided  in  this  agreement,  and  shall  possess  within  the  several 
states  into  and  through  which  its  railway  or  any  part 
thereof,  or  any  of  its  branches,  or  any  one  or  any  part 


[  25  ] 


thereof  may  run,  all  the  rights,  privileges,  exemptions, 
and  franchises  of  each  of  the  companies  so  consolidated.” 

“And  upon  the  consummation  of  said  act  of  consoli¬ 
dation,  all  and  singular,  the  rights,  privileges,  exemptions, 
and  franchises  of  each  of  the  said  companies  parties  hereto, 
and  of  each  and  every  of  the  companies  merged  in  or  consoli¬ 
dated  with  them  or  either  one  of  them ,  and  all  the  property, 
real,  personal,  and  mixed;  and  all  debts  due  on  whatever 
account  to  either  of  said  companies,  as  well  as  all  stocks, 
subscriptions,  and  other  things  in  action  belonging  to 
either  of  said  companies.”  It  gives  a  further  enumera¬ 
tion,  including  “all  claims,  demands,  property,  rights  of 
every  kind  :  leases ,  leasehold,  interests ,  franchises ,  bonds, 
stocks,”  etc., etc.,  “belonging  to  either  of  said  companies.” 

.  .  .  “  in  whatever  state  or  states  soever  the  same 

may  be  situated,  or  wherever  existing,”  etc. 

So  far  as  the  agreement  discloses  we  are  left  in  the 
dark  what  companies  or  lines  of  road  were  intended  to  he 
consolidated,  but  not  left  ignorant  that  the  transaction  was 
intended  to  cover  unnamed  companies  and  to  effect  a  con¬ 
solidation  of  them  all,  “without  further  act  or  deed.” 

The  answer  gives  more  specifications.  It  discloses  the 
existence  of  seven  corporations,  whose  lines  of  road,  in  all 
or  in  part,  the  two  contracting  companies  proposed  to  con¬ 
solidate.  One  of  the  seven  companies,  viz.,  the  Cincinnati, 
Sandusky  and  Cleveland  Company  was  propably  not  in¬ 
tended  to  be  included  in  the  consolidation,  although  that 
part  of  its  line  between  Dayton  and  Springfield  is  indis¬ 
pensable  to  the  defendants’  theory  of  their  own  case. 

Part  of  the  information  obtained  from  the  answer  is, 
the  fact  that  not  one  of  the  seven  corporations  covered  by 
the  agreement  had  ever  been  merged  in  or  consolidated 
with  the  two  companies,  or  had  ever  formed  the  whole  or 
part  of  either  of  them,  before  the  agreement. 

The  corporations  named  or  implied  in  the  answer 
are : — 

1.  The  Cincinnati,  Hamilton  and  Dayton  Railroad 


[  26  ] 


Company,  owning  in  fee  simple  and  operating  a  line  of 
railroad  in  the  State  of  Ohio,  extending  from  Cincinnati  to 
Dayton. 

2.  The  Dayton  and  Michigan  Railroad  Company, 
whose  line  of  railroad  extends  from  Dayton  via  Sidney  to 
Toledo,  all  in  the  State  of  Ohio;  in  which  line  of  road  the 
Cincinnati,  Hamilton  and  Dayton  Railroad  Company  is 
alleged  to  have  had  an  estate  of  perpetual  leasehold  under 
and  by  virtue  of  which  it  owned  and  operated  the  line. 

3.  The  Cincinnati,  Richmond  and  Chicago  Railroad 
Company,  representing  a  line  of  railroad  extending  from 
the  city  of  Hamilton,  in  Ohio,  to  the  junction  about  two 
miles  from  Richmond,  Indiana,  with  rights  of  way  and  of 
joint  use  over  another  railroad  to  said  Richmond.  It  is 
alleged  that  the  Cincinnati,  Hamilton  and  Dayton  Railroad 
Company  had  an  estate  of  perpetual  leasehold  in  this  line, 
and  under  and  by  virtue  of  it  owned  $nd  operated  the  line. 

4.  The  Cincinnati,  Hamilton  and  Indianapolis  Rail¬ 
road  Company,  representing  a  line  of  railroad,  part  of 
which  is  in  Ohio  and  part  in  Indiana;  extending  from  the 
city  of  Hamilton,  in  Butler  County,  Ohio,  via  Connersville 
and  Rushville,  in  Indiana,  to  Indianapolis,  in  said  state. 
The  answer  does  not  allege  that  the  Cincinnati,  Hamilton 
and  Dayton  Company  either  owned  this  line  of  road,  or 
had  leased  it,  but  only  that  said  company  operated  it. 

5.  The  Cleveland,  Columbus,  Cincinnati  and  Indian¬ 
apolis  Railway  Company,  a  corporation  under  the  laws  of 
Ohio  and  Indiana,  which  owned  in  fee  simple  and  operated 
lines  of  railway  extending  from  Cleveland  via  Gabon  and 
Delaware  to  Columbus,  all  in  Ohio;  and  from  Gallon, 
Ohio,  via  Sidney,  Ohio,  and  Union  City  on  the  boundary 
line  between  Ohio  and  Indiana,  to  Indianapolis,  in  said 
state ;  and  from  said  Delaware  to  Springfield,  Ohio. 

6.  The  Cincinnati,  Sandusky  and  Cleveland  Railroad 


I  27  ] 


Company,  which  constructed  and  had  owned  a  line  of  rail¬ 
road  in  Ohio,  extending  from  Sandusky  via  Springfield  to 
Dayton,  and  also  from  Sandusky  via  Springfield  to  Colum¬ 
bus.  It  is  alleged  that  the  Cleveland,  Columbus,  Cincin¬ 
nati  and  Indianapolis  Company  had  an  estate  of  perpetual 
leasehold,  by  virtue  of  which  it  owned  and  operated  that 
part  of  the  line  between  Springfield  and  Dayton. 

7.  The  Cincinnati  and  Springfield  Railway  Company 

in  Ohio,  whose  line  was  constructed  from  Cincinnati  to 

\ 

Dayton,  and  was  extended  to  Springfield  by  a  contract 
for  that  part  of  the  line  between  Dayton  and  Spring- 
field,  of  the  Cincinnati,  Sandusky  and  Cleveland  Rail¬ 
road  Company,  the  whole  of  said  line  having  been  trans¬ 
ferred  to  said  Cleveland,  Columbus,  Cincinnati  and  Indian¬ 
apolis  Company,  under  and  by  virtue  of  which  transfers  the 
Cleveland,  Columbus,  Cincinnati  and  Indianapolis  Com¬ 
pany  claim  to  have  owned  and  operated  the  whole  line. 

OWNERSHIP  OF  CONTRACTS. 

One  of  the  roads  included  in  the  congeries  of  lines  to 
be  covered  by  the  consolidation  is  the  Cincinnati,  Hamilton 
and  Indianapolis  railroad,  concerning  which  not  even  a 
lease  or  any  form  of  ownership  is  stated.  The  only 
power  over  that  road  held  by  the  Cincinnati,  Hamilton 
and  Dayton  Company  consists  in  the  fact  that  it  holds  a 
majority  of  the  stock. 

The  road,  or  part  of  a  road,  constructed  by  the  Cincin¬ 
nati,  Sandusky  and  Cleveland  Company,  and  contracted  to 
the  Cincinnati  and  Springfield  Company,  by  perpetual  con¬ 
tract,  is  a  road  in  which,  on  the  theory  of  defendants  them¬ 
selves,  ownership  must  be  established,  in  order  to  have  the 
roads  of  the  companies  seeking  consolidation  connect,  so 
as  to  admit  of  consolidation  under  the  statute. 


[  23  ] 


The  contract  as  to  this  piece  of  road  is  exhibited  by 
copy  with  the  replication. 

The  word  lease  is  not  an  adequate  description  of  it.  It 
is  a  joint  contract  for  a  mutual  exchange  of  business  and 
business  influence;  for  arranging  rates  of  fare  and  of  time¬ 
tables  and  for  working  together.  It  bound  both  parties  to 
discriminate  in  each  other’s  favor,  and  to  divide  between 
them  the  gross  earnings  of  the  leased  road,  in  the  propor¬ 
tion  of  35  per  cent  to  the  lessor  and  65  per  cent  to  the 
lessee. 

The  Cincinnati  and  Springfield  Company  bound  itself 
to  “  use  said  railroad  in  connection  with  a  railroad  about  to  be 
built  by  itself  between  the  city  of  Dayton  and,  the  city  of  Cin¬ 
cinnati,  so  as  to  form  a  trunk  road  from,  the  city  of  Cincinnati , 
by  the  way  of  the  city  of  Springfield ,  to  Cleveland \  Sandusky , 
and  Columbus .” 

Cinder  this  clause,  an  attempted  consolidation  with  the 
Cincinnati,  Hamilton  and  Dayton  road  is  a  violation  of  the 
covenants  of  the  Cincinnati  and  Springfield  Company,  and 
entitles  the  Sandusky  and  Cleveland  Company  to  forfeit 
the  contract,  “and  to  have  again,  repossess,  and  enjoy  the 
same  as  of  its  or  their  former  estate.” 

The  parties  to  the  contract  distinctly  contemplated 
that  the  Cincinnati  and  Springfield  Company  should  not 
own  the  road.  It  was  to  continue  to  be  owned  as  before. 
It  was  contemplated  that  the  Cincirwiati,  Sandusky  and 
Cleveland  Company  would  incur  a  continuing  liability  as 
owner  on  claims  for  damages  and  losses  incurred  in  running1 
the  road,  against  which  the  Cincinnati  and  Springfield 
Company  bound  itself  to  indemnify  and  save  the  owners 
harmless. 

The  Cincinnati,  Sandusky  and  Cleveland  Company, 
pursuing  the  same  idea  of  continued  ownership,  covenanted 
to  renew  the  contract.  It  covenanted  : 


[  29  ] 


“And  said  party  of  the  first  part  further  covenants 
and  agrees  that,  upon  the  request  of  said  second  party,  its 
successors  or  assigns,  it  will  proceed  and  appropriate,  un¬ 
der  the  laws  of  the  State  of  Ohio,  such  real  estate  and 
rights  and  interests  as  may  be  necessary  or  required  for 
the  maintenance  and  operating  said  railroad,  said  second 
party,  its  successors  or  assigns,  paying  all  costs  and 
damages  therefor,  and  for  which  said  first  party  may  be¬ 
come  liable/7 

It  will  not,  I  apprehend,  be  contended  that  a  railroad 
corporation  could  exercise  the  right  of  eminent  domain  for 
a  road  owned  by  another  company,  or  that  the  parties  to 
the  contract  supposed  it  could. 

The  contract  of  the  Dayton  and  Michigan  Company, 
party  of  the  first  part,  with  the  Cincinnati,  Hamilton  and 
Dayton  Company,  party  of  the  second  part,  made  in  1863, 
and  the  modification  of  it,  made  in  1870,  provided  for  keep¬ 
ing  up  and  maintaining  the  organization  of  the  party  of 
the  first  part.  The  party  of  the  second  part  was  bound  to 
maintain  and  operate  the  road,  “  in  connection  with  its  own 
line  of  railroad ,  as  a  through  line  .”  Among  other  consider¬ 
ations,  the  party  of  the  first  part  gave  the  party  of  the 
second  part  a  bonus  in  the  stock  of  the  party  of  the  first 
part  to  the  amount  of  $1,000,000,  and  in  its  bonds  and  cou¬ 
pons  to  the  amount  of  $600,000,  to  become  “  the  sole  and 
absolute  property  of  the  second  party.’7  The  Cincinnati, 
Hamilton  and  Dayton  Company  became  the  guarantor  of 
the  bonds  of  the  Dayton  and  Michigan  Company,  and  stip¬ 
ulated,  after  paying  certain  expenses  and  liabilities,  “  to  pay 
over  the  balance  of  such  earnings  to  said  Dayton  and 
Michigan  Railroad  Company,  to  be  by  said  company  applied 
to  the  payment  of  dividends ,  or  otherwise ,  as  may  be  ordered  by 
the  board,  of  directors  ” 

The  agreement  of  1870  made  some  modifications,  and, 
among  pthers,  the  stipulation  of  the  Cincinnati,  Hamilton 


[  30  ] 


and  Dayton  Company  to  pay  over  all  the  excess  of  earnings, 
Avas  commuted  for  a  guaranty  of  three  and  a  half  per  cent 
dividends  on  the  unpreferred  stock  of  the  Dayton  and 
Michigan  Company. 

« 

In  this  agreement  the  Dayton  and  Michigan  Company 
undertook  to  “protect  the  title  of  the  first  party  to  the  de¬ 
mised  property,  during  the  continuance  of  the  lease,  against 
all  incumbrances  thereon,  and  all  claims  whatever.” 

This  arrangement  was  so  much  more  than  a  lease,  that 
the  word  lease  does  not  describe  it. 

The  contract  of  the  Cincinnati,  Richmond  and  Chi¬ 
cago  Railroad  Company  with  the  Cincinnati,  Hamilton  and 
Dayton  Company  does  not  disclose  a  bonus  to  the  Cincin¬ 
nati,  Hamilton  and  Dayton  Company,  but,  with  less  detail, 
is  framed  on  the  same  general  plan.  It  provides  for  the 
right  to  keep  up  and  maintain  the  corporate  existence  of 
the  Cincinnati,  Richmond  and  Chicago  Company;  for  main¬ 
taining  and  operating  the  road  as  that  company  “is  or  may 
by  law  be  bound  to  do to  develop  its  business;  to  guaranty 
certain  liabilities  and  expenses,  and  to  “ account  for  and 
pay  over  ”  to  the  Cincinnati,  Richmond  and  Chicago  Com-, 
pany  “  any  surplus  of  said  earnings  and  profits  that  may  then 
remain  annually 

The  right  of  way,  under  the  decisions  in  Hatch  v.  Cin¬ 
cinnati  and  Indianapolis  R.  R.  Co .,  18  Ohio  St.  92,  and  in 
the  Junction  Railroad  Co.  v.  Ruggles ,  7  Ohio  St.  1,  is  an 
easement  in  the  land,  and,  therefore,  an  incorporeal  interest.  This 
idea  is  not  incompatible  with  the  doctrine  of  Coe  v.  C.,  P. 
§  I.  R .  R .  Co.,  10  Ohio  St.  372  ;  for  in  the  latter  case  the  rail¬ 
road  and  appurtenances  had  been  affixed  to  the  ground 
over  which  the  right  of  way  existed.  Situated  as  that 
road  was,  and  with  reference  to  conflicting  claims  and  liens 
of  creditors,  the  road  and  fixtures  were  treated  as  real  es- 


4 


[  31  ] 


tate ;  locomotives,  cars,  and  materials,  etc.,  as  personal 
property.  But  the  court  said  : 

“  We  are  not  called  upon,  in  this  case,  to  decide  what, 
in  the  event  of  a  determination  of  the  use  for  which  inter¬ 
est  in  real  estate  was  obtained,  would  be  the  respective 
rights  of  the  owners  of  the  real  estate,  and  the  creditors  of 
the  corporation,  in  those  things  affixed  in  the  construction 
of  the  road,  and  which  might  be  separated  from  the  land, 
and  would  have  value  when  so  separated.  We  are  not 
called  upon  to  decide  whether  either  such  owners  or  the 
state  could  object  to  such  a  separation  for  the  purpose  of 
paying  the  just  debts  of  the  corporation.  When  those 
questions  arise,  it  may  be  necessary  to  determine  whether 
the  rule  as  to  fixtures  between  vendor  and  vendee ,  or  land¬ 
lord  and  tenant ,  can  be  justly  and  equitably  applied” 

The  cost  of  the  easement,  compared  with  the  cost  of 
the  superstructure,  appurtenances,  and  apparatus,  and  the 
value  of  franchises  which,  in  the  aggregate,  constitute  the 
earning  power  and  value  of  a  railroad,  leave  little  reason, 
in  the  nature  of  the  case,  for  assimilating  this  kind  of  a 
railroad  lease  to  a  lease  on  real  estate.  It  is  a  lease  upon 
property  represented  by  shares  of  stock  which  in  law  are 
personal  property.  The  reasons  which  led  to  treating  per¬ 
manent  leases  on  real  estate  as  real  estate,  instead  of  chattels, 
had  their  origin  in  dower  rights,  statutes  of  descent  and  dis¬ 
tribution,  and  judicial  sales.  Statutes  of  distribution  in 
regard  to  railroad  property  do  not  reach  further  than  shares 
of  stock  owned  by  individuals,  and  are  easily  dealt  with. 
Dower  rights  in  the  property  over  which  the  easement  is 
created  are  not  practically  important.  Only  judicial  sales 
for  debts  owing  by  railroad  corporations  could  assimilate 
railroad  property  to  real  estate;  and  in  view  of  the  usual 
methods  of  dealing. with  such  sales,  the  idea  of  real  estate 
in  connection  with  them,  whether  right  or  wrong,  adds 
little,  if  any  thing,  to  convenience  or  safety. 


t  32  ] 


But  such  contracts  as  those  now  under  discussion,  are 
never  made  with  reference  to  real  estate.  At  least,  I  do 
not  remember  to  have  seen  one.  In  fact,  when  you  look 
to  the  elements  usually  found  in  a  permanent  lease  of 
real  estate,  these  railroad  contracts  do  not  resemble  them. 
If  corporations  could  be  partners,  these  so-called  leases 
would  more  resemble  articles  of  partnership.  There  are  no 
fixed  rents.  They  are  agencies  or  bailments,  and  a  constant 
accounting  between  the  parties  for  current  business  is  pro¬ 
vided  for.  It  is  not  necessary  to  inquire  whether  or  not' 
they  can  in  any  just  sense  be  called  leases. 

The  terms  of  the  contracts  make  both  parties  share  all 
the  benefits  of  the  use  of  the  roads,  and  bind  both  parties 
to  contribute  to  their  success.  The  terms  also  bind  the 
owners  to  keep  up  the  corporate  existence  of  the  compa¬ 
nies,  and  to  exercise  their  corporate  functions  in  connection 
with  the  use  of  the  property. 

They  empower  the  owner  companies  to  resume  posses¬ 
sion  of  the  roads  on  failure  of  the  other  parties  to  perform 
conditions  of  a  kind  not  usually  connected  with  title  to 
real  estate. 

The  situation  is  unlike  that  of  the  lessee  of  real  es¬ 
tate.  Ordinary  real  estate  is  only  private  property.  No 
corporate  franchise  or  right  of  eminent  domain  is  needed 
for  its  ownership  or  management.  Public  interest  is  not 
involved  or  public  policy. 

A  railroad  corporation  is  created  on*  ideas  of  public 
policy,  charged  with  public  duties  and  not  allowed  to  ab¬ 
dicate  them. 

The  lessor  company  which  leases  a  railroad  is  liable  for 
the  negligence  of  the  lessee. 

The  York  and  Maryland  L.  R.  Co.  v.  Ross  Winans ,  11 
II.  30. 

Railway  v.  Barron ,  5  Wall.  90. 


[  33  ] 


The  Chicago  $  R.  1.  Co.  v.  Whipple,  22  Ill.  105. 

O.  §  M.  R.  Co.  v.  Dunbar ,  20  Ill.  385,  623. 

Chi.  §  St.  Paul  R.  Co.  v.  McCarthy,  20  Ill.  385. 
Nelson  v.  The  Vt.,  etc.,  26  Vt.  717. 

McElroy  v.  Nashua ,  etc.,  4  Cash.  400. 

Brice  on  Ultra  Vires  (2d  ed.),  305  n. 

Railroad  v.  Balner ,  57  Ind.  572. 

Railroad  v.  Mayes,  49  Geo.  355. 

Langley  v.  Railroad,  10  Gray,  103. 

In  Railway  Co.  v.  Barron,  17  Wall.  445,  the  Court 
says  : 

“  It  is  the  accepted  doctrine  of  this  country,  that  a 
railroad  corporation  can  not  escape  the  performance  of 
any  duty  or  obligation  imposed  by  its  charter  or  the  gen¬ 
eral  laws  of  the  state,  by  a  voluntary  surrender  of  its 
road  into  the  hands  of  lessees.”  P.  450.  Cites.  Red- 
field  on  .Railways  (5th  ed.),  chap.  22,  §  1,  p.  616. 

If  the  Cleveland,  Columbus,  Cincinnati  and  Indian¬ 
apolis  Company  owns  the  road  between  Springfield  and 
Dayton,  it  is  by  virtue  of  the  contract.  The  same  princi¬ 
ple  would  make  it  owner  of  the  Cincinnati  and  Springfield 
road;  thus, its  line  of  road  would  be  a  through  line  front 
the  Ohio  river  to  the  lake.  On  the  same  principle,  the 
Cincinnati,  Hamilton  and  Dayton  Company  would  own  the 
Dayton  and  Michigan  road,  and  own  a  through  line  from 
the  river  to  the  lake. 

In  this  view,  each  of  the  contracting  companies  would 
own  a  through  line,  and  the  two  lines  would  be  parallel 
and  competing  lines. 

These  lines  could  not  he  consolidated,  not  only  because 
they  are  parallel  and  competing,  but  because  they  were  not 
so  constructed  or  designed  as  to  admit  the  passage  of  cars 
over  both  of  them  continuously,  or  so  that,  when  united, 


[  «  ] 

the  several  roads  form  a  continuous  line  for  the  passage  of 
cars  without  break  or  interruption. 

To  avoid  this  difficulty,  each  of  the  companies  con¬ 
tracting  for  consolidation  seeks  to  separate,  in  idea,  the 
line  it  claims  to  own.  into  two  parts,  and  to  consolidate  the 
north  part  of  one  with  the  south  part  of  the  other.  In  this 
theyf  assume  that  parts  and  fragments  of  .lines  owned  may 
he  consolidated  without  the  other  parts.  I  apprehend  that 
such  is  not  the  law.  Companies  may  be  consolidated  when 
parts  only  of  their  respective  lines  of  road  are  constructed, 
but  I  find  nothing  to  authorize  companies  to  consolidate  . 
any  part  of  a  line  another  part  of  which  is  not  included  in 
the  consolidation. 

The  things  consolidated  are  the  companies — two  corpo¬ 
rations  become  one.  What  they  both  owned  before  the 
consolidation  is  owned  afterward  by  the  new  corporation. 
The  defendants  are  as  much  in  need  of  this  last  feature  of 
the  law  as  they  are  of  its  opposite,  because  this  feature  is 
relied  upon  to  carry  the  remaining  parts  of  the  two  lines 
into  the  new  company,  and  thus  consolidate  in  one  com¬ 
pany  the  ownership  of  the  two  competing  lines. 

Again  :  if  the  companies  contracting  to  consolidate 
own  the  lines,  contracted  to  them,  the  Cincinnati,  Hamil¬ 
ton  and  Dayton  Company  owns  the  Cincinnati,  Richmond 
and  Chicago  road,  which  does  not  connect  with  the  other 
lines  in  a  way  required  by  the  statute  in  order  to  permit 
consolidation. 

Neither  can  the  Cincinnati,  Hamilton  and  Indianapolis 
Company  be  consolidated  with  the  other  companies,  because 
its  line  of  road  does  not  connect  with  them  in  the  way  re¬ 
quired  by  law,  nor  is  it  owned  or  leased  by  either  of  them. 

The  lines  described  in  the  answer  to  the  quo  warranto , 
taken  together  as  a  congeries  or  system,  do  not  admit  the 
passage  of  cars  over  all  of  them  continuously,  nor  do  they, 


united,  form  a  continuous  line.  If  the  plan  of  consolida¬ 
tion  includes  them  all,  none  of  the  companies  can  he  con¬ 
solidated. 

But  if  the  two  companies  contracting  to  consolidate 
own  all  the  lines,  the  consolidation  of  the  contracting  cor¬ 
porations  will  consolidate  them  all.  Admitting  for  argu¬ 
ment  that  the  ownership  of  the  contracts  or  leases  is 
equivalent  to  ownership  of  the  leased  lines,  consolidation 
is  inadmissible  as  to  any  of  them. 

On  the  other  hand,  if  the  contracting  companies  are 
not  held  to  own  the  roads  which  they  work  under  contract, 
the  Cincinnati  and  Springfield  Company  did  not  own  the 
road  between  Dayton  and  Springfield  by  virtue  of  its  con¬ 
tract  with  the  Cincinnati,  Sandusky  and  Cleveland  Com¬ 
pany,  nor  did  it  assign  to  Cleveland,  Columbus,  Cincinnati 
and  Indianapolis  Company  more  than  it  had  by  its  con¬ 
tract.  In  this  view  the  companies  contracting  for  consoli¬ 
dation  were  not  so  constructed  or  planned  that  the  two 
roads  united  formed  a  continuous  line  for  the  passage  of 
cars. 

Second.  Whether  or  not  the  railroads  referred  to  in 
the  contract  for  consolidation  and  the  companies  which 
owned  them  were  such  as  could  be  lawfully  consolidated, 
the  contract,  certificate,  and  other  proceedings  relating 
thereto  were  not  such  as  in  law  were  required  to  make  a 
valid  consolidation. 

Section  3381,  Revised  Statutes ,  declares  that  “  The  consoli¬ 
dation  shall  he  made  under  the  conditions  and  restrictions  ” 
stated.  Section  3382  provides  that  “  When  the  agreement 
is  made  and  perfected,  as  provided  in  the  preceding  section, 
and  the  same  or  a  copy  thereof  is  filed,  the  several  com¬ 
panies  parties  thereto,  shall  be  deemed  and  taken  to 
be  one  company,”  etc. 


[  36  ] 


The  steps  pointed  out  by  the  statute  are  conditions 
precedent. 

The  making  of  the  agreement  and  certificate  and  filing 
of  it,  appear  to  hold  the  same  or  similar  relation  to  a  con¬ 
solidated  company,  which  the  ordinary  certificate,  filed 
with  the  Secretary  of  State,  holds  to  ordinary  railway  cor¬ 
porations. 

In  The  Atlantic  and  Ohio  Railroad,  Company  v.  Sullivan  t, 
5  Ohio  St.  276,  it  was  said  that  the  certificate  and  public 
record  of  the  organization  must  be  “  in  strict  compliance 
with  the  requirements  of  law.”  In  that  case  the  proposed 
line  of  the  contemplated  railroad  company  was  described 
with  alternatives,  and  the  termini  were  not  definitely  stated. 
The  certificate  was  held  bad  on  that  account,  and  it  was 
held  that  no  corporation  had  been  created  by  it. 

In  Callender  v.  Painesville  and  H.  Railroad  Company , 
11  Ohio.  St.  517,  the  line  of  the  contemplated  road  was 
considered  not  more  exactly  defined  than  in  the  case  first 
cited,  but  the  court  deemed  the  lines  in  both  cases  as  well 
defined  as  had  been  usual  in  this  state,  which  it  held  to  be 
all  that  the  law  required.  The  decision,  however,  was 
based  on  an  estoppel.  It  did  not  doubt  that  the  certificate 
must  conform  strictly  to  the  law.  See  also, 

State  v.  C.  0.  J\l.  R .  Association ,  29  Ohio  St.  399. 

Spinning  v.  H.  B.  $  S.  Association ,  26  Ohio  St.  483. 

Warner  v.  Callender ,  20  Ohio  St.  190. 

Raccoon  River  Navigation  Co.  v.  Eagle ,  29  Ohio  St.  238. 

State  v.  Lee,  21  Ohio  St.  662. 

I  apprehend  that  the  certificate  must  show,  when  taken 
in  connection  with  its  being  filed  in  the  proper  otfice,  the 
prima  facie  existence  of  the  state  of  affairs  which  consti¬ 
tutes  a  corporation. 

*  .  *■•  *  ,  v 

“  To  give  the  corporation  organic  life,  the  mode 


[  37  ] 


pointed  out  in  the  charter  must  ordinarily  be  strictly  pur¬ 
sued.  Conditions  precedent  must  be  fairly  complied 
with.”  1  Redf.  on  Rwys.  64,  sec.  18,  and  note. 

The  right  to  consolidate  companies  is  a  franchise,  con¬ 
ditioned  upon  and  inseparable  from  the  performance  of  the 
statutory  requirements,  in  the  same  sense  as  the  right,  when 
.  granted  to  a  railroad  company,  to  cross  a  common  high¬ 
way. 

Little  Miami  R.  Co.  v.  Comm’rs ,  31  Ohio  St,  338. 

State  v.  Railroad  Co.,  36  Ohio  St.  434. 

M.,  C.  $  L.  M.  Co.  v.  Brown,  26  Ohio  St.  224. 

M.,  C.  §  L.  M.  Co.  v.  Stout,  26  Ohio  St.  242. 

The  contract  and  certificate  are  invalid  for  the  follow¬ 
ing  reasons,  viz. : 

For  vagueness :  in  that  it  proposes  to  include  in  the 
consolidation  an  indefinite  number  of  lines  and  branches  of 
railway  without  describing  them,  or  saying  in  what  direc¬ 
tions  they  run,  or  in  what  states  they  are  located,  or  what 
places  they  connect;  and  in  that  it  proposes  to  include  in 
the  consolidation  an  indefinite  number  of  railway  corpora¬ 
tions,  without  giving  their  names,  or  their  places  of  busi¬ 
ness,  or  the  states  under  whose  law7  they  bold  their  fran¬ 
chises. 

Also  invalid  by  reason  of  providing  for  the  assignment 
of  an  indefinite  number  of  railway  lines,  and  an  indefinite 
amount  and  variety  of  assets  belonging  to  railroad  corpo¬ 
rations,  not  joining  in  the  agreement,  nor,  so  far  as  ap¬ 
pears,  consenting  or  in  any  way  consulted. 

And  in  that  it  did  not  make  known  whether  or  not  the 
lines  of  railway  represented  by  the  unnamed  corporations 
were  so  situated  as  that  they  could  by  law  be  consolidated 
with  each  other,  or  with  the  lines  of  .the  contracting  com¬ 
panies. 


[  3S  ] 


And  in  that  it  undertook  to  incorporate  a  new  railway 
company,  whose  intended  lines  of  road  were  left  to  conject¬ 
ure,  without  mention  even  of  the  alternative  routes,  held 
insufficient  in  former  cases. 

The  contract  is  also  invalid  because  it  fails  to  comply 
with  the  requirement  of  the  statute,  to  “  prescribe  the  num¬ 
ber  of  the  directors  and  other  officers”  of  the  new  corpora¬ 
tion  “  and  their  places  of  residence.”  It  does  neither.  The 
requirement  of  the  statute  must  be  accepted  as  based  on 
adequate  reasons  of  policy  and  convenience.  It  may  have 
relation  to  the  same  policy  as  that  provided  for  in  Sec.  260 
of  the  Revised  Statutes  ;  or  to  the  just  representation  of 
local  interests,  or  to  both.  Whatever  the  reasons  for  the 
requirement,  the  agreement  does  not  conform  to  it. 

Article  first  declares  that 

* 

“  The  directors  of  the  said  new  corporation  shall  be  thir¬ 
teen  in  number;  and  the  officers  thereof  shall  consist  of 
a  president,  one  or  more  vice-presidents,  a  treasurer,  a  sec¬ 
retary,  and  such  other  officers  as  may  be  deemed  necessary  by 
the  board  of  directors .  All  of  said  officers  shall  be  resi¬ 
dents  of  the  State  of  Ohio.” 

This  does  not  prescribe  the  number  of  officers,  but 
leaves  the  directors  to  do  it.  Since  the  number  of  officers 
is  not  prescribed,  it  leaves  the  aggregate  number  of  “  direc¬ 
tors  and  other  officers  ”  unfixed.  It  also  excludes  the  di¬ 
rectors  from  the  list  of  officers,  and  avoids  prescribing  where 
the  directors  shall  reside.  With  reference  to  the  officers, 
as  distinguished  from  directors,  it  seeks  to  elude  the  re¬ 
quirement  by  saying  in  general  terms  they  shall  be  resi¬ 
dents  of  the  State  of  Ohio.  It  does  not  limit  the  directors 
to  the  State  of  Ohio,  nor  to  the  United  States.  So  far  as 
the  agreement  is  concerned,  the  directors  may  all  reside  in 
London  or  Berlin  an<J  send  their  officers  to  reside  in  Ohio. 
It  is  not  necessary  to  inquire  whether  a  designation  of  the 


[  39  ] 


State  of  Ohio  generally  as  the  residence  of  officers,  of  whom 
there  are  to  be  an  indefinite  number,  can  answer  the  prob¬ 
able  objects  of  the  requirement,  since  even  that  vague  des¬ 
ignation  is  not  given  as  to  the  directors.  In  any  view  of 
the  language  of  the  agreement,  it  avoids  compliance  with 
the  statutory  requirement  both  as  to  the  number  and  resi¬ 
dence  of  the  <%  directors  and  other  officers.” 

It  is  also  invalid  because  it  does  not  conform  to  the 
requirement  of  the  statute  to  prescribe  the  number  of 
shares  of  the  capital  stock  and  the  amount  of  each  share 
of  the  stock  of  the  new  company.  This  subject  is  dealt 
with  in 

11  Article  fourth.  The  authorized  capital  stock  of  said 
Ohio  Railway  Company  shall  be  twenty  millions  of  dollars, 
to  he  divided  into  two  hundred  thousand  shares  of  one  hun¬ 
dred  dollars  each,  but  the  stockholders  of  said  new  com¬ 
pany  may  increase  the  stock  thereof  whenever  they  may 
deem  it  necessary  and  advisable.” 

In  effect,  this  evades  the  requirement  of  the  statute; 
for,  instead  of  “prescribing”  the  amount  of  capital,  it 
names  an  amount,  for  the  present,  to  be  increased,  not  in 
accordance  with  law,  but  at  the  discretion  of  stockholders. 
If  this  is  held  a  compliance  with  the  requirement,  the  ob¬ 
jection  is  changed,  but  not  removed.  Secs.  3807,  3308  of 
the  Revised  Statutes  authorize  an  increase  of  capital  stock 
for  specified  purposes  only,  and  when,  in  the  opinion  of  the 
directors ,  the  amount  of  stock  is  insufficient.  If  not  an 
evasion  of  the  requirement  to  prescribe  the  amount,  it  is 
an  attempt,  by  agreement,  to  secure  a  right  to  increase  the 
stock,  without  reference  to  statutory  conditions  or  limits, 
and  to  confer  the  discretion  upon  stockholders  which  by 
law  is  vested  in  directors.  The  effect  of  such  an  agree¬ 
ment  I  abstain  from  discussing.  I  qonceive  that  such  a 


[  40  ] 


discussion  should  not  be  made  necessary,  now  or  hereafter, 
by  an  unauthorized  provision  in  such  a  paper. 

The  stockholders  of  the  contracting  companies,  in  case 
they  &hal  1  be  found  to  have  ratified  and  approved  anything, 
have  ratified  and  approved  the  agreement  as  drawn ,  and  not 
otherwise.  The  whole  instrument  must  be  sustained,  or  no 
part  of  it  can  be.  Each  and  all  of  the  six  railway  cor¬ 
porations  are  consolidated  with  each  other,  or  none  of  them 
are.  The  Cincinnati,  Hamilton  and  Indianapolis  Company, 
which  is  not  alleged  to  be  owned  by  or  leased  to  either  of 
the  contracting  companies,  must  be  held  to  the  consolida¬ 
tion,  or  none  of  them  can  be. 

It  must,  I  apprehend,  be  held  that  the  corporations 
other  than  the  contracting  parties  can  not  be  dissolved 
without  either  corporate  action  of  their  own  or  judgments 
of  forfeiture  of  their  franchises. 

If  any  thing  has  happened  possible  to  be  construed  as 
consent  on  their  part,  it  must  also  be  discovered  by  what 
authority  the}7  were  capable  of  giving  consent.  Thomas  v. 
Railroad  Company,  11  Otto,  71. 

It  is  not  enough,  if  such  a  fact  exists,  to  show  that  the 
contracting  corporations  held  a  controlling  interest  in  the 
stock  of  each  of  said  non-contracting  companies,  and  might 
have  procured  their  formal  consent.  Their  consent  $s  cor¬ 
porations  was  not  procured,  nor  is  it  an  element  in  the 
agreement. 

Perhaps  the  addition  of  terms  not  required,  yet  not 
in  themselves  unlawful,  would  not  invalidate  the  agree¬ 
ment.  But  none  of  the  terms  of  consolidation  made  in 
the  agreement  can  be  afterwards  disregarded. 

Judge  Bedfield,  describing  the  English  method  of  get¬ 
ting  up  a  corporation,  says  : 


[  41  ] 


“  There  the  promoters  usually  associate  under  two 
provisional  deeds,  the  one  called  a  ‘subscribers  agree¬ 
ment,’  and  the  other  a  ‘  subscription  or  parliamentary 
contract,’  which  are  expected  only  to  serve  as  a  basis  of  a 
temporary  organization  till  the  charter  is  obtained.  This 
is  specifically  and  often  in  detail,  to  some  extent,  provided 
for  in  the  subscriber’s  agreement  or  deed  of  association. 
A  board  of  provisional  directors  is  provided  to  carry  for¬ 
ward  the  enterprise,  whose  powers  are  defined  in  the  sub¬ 
scriber’s  agreement  or  deed  of  association,  and  whose  acts 
will  not  bind  the  members,  unless  strictly  within  the  pow¬ 
ers  conferred  by  the  deed.”  1  Redf.  on  Railw.  5,  §  2. 

It  is  required  by  ordinary  principles  of  justice  that  the 
statutory  agreement  for  consolidation  should  have  not  less 
binding  force  than  the  agreement  of  promoters  in  England. 

There  is  a  provision  in  the  agreement  that  the  stock 
in  the  non-contracting  companies  shall  be  deemed  and 
taken  to  be  the  stock  of  the  contracting  companies. 
Where  did  any  of  the  seven  corporations  obtain  power  to 
make  or  consent  to  such  an  arrangement  ? 

The  agreement,  without  that  provision  and  every  other 
provision  in  it,  has  not  been  approved  by  stockholders,  or 
certified  by  clerks,  or  filed  with  the  Secretary  of  State. 

Another  omission  was  made.  The  agreement  was  not 
certified.  It  was  filed  without  a  certificate.  There  was,  it 
is  true,  written  upon  it  a  statement,  which  was  called  a 
certificate.  But  it  contained  nothing  which  the  law  re¬ 
quired  to  be  certified,  and  for  that  reason,  I  apprehend,  is 
in  law  a  nullity.  , 

Section  3381  requires  separate  meetings  of  the  stock¬ 
holders  of  the  contracting  companies,  and  a  vote  by  ballot 
at  each  meeting,  each  share  of  stock,  on  which  has  been 
paid  all  the  installments  called  for  by  the  board  of  direc¬ 
tors,  giving  the  holder  a  right  to  one  vote;  and  if  two- 
thirds  of  all  the  votes  cast  at  the  meeting  be  for  the  adop- 


» 


tion  of  the  agreement,  that  fact  shall  be  certified  thereon 
by  the  secretary  of  each  of  the  companies;  and  the  agree¬ 
ment  so  adopted,  on  a  certified  copy  thereof  shall  he  filed, 
etc. 

What  fact  is  intended  by  “  that  fact?”  The  narrow¬ 
est  construction  possible  is  the  fact  that  “  two-thirds  of  all 
the  votes  cast  at  the  meeting  be  for  the  adoption  of  the  agree¬ 
ment.”  This  would  imply  that  the  certificate  should  in¬ 
clude  the  circumstance  that  a  meeting  was  held.  I  appre¬ 
hend  that  the  fact  to  be  certified  was  the  general  fact  of 
adoption  in  the  manner  required  by  the  statute,  stating  the 
circumstances  necessary  under  the  statute  to  make  up  the 
general  fact.  On  the  contrary,  not  one  of  the  facts  required 
for  the  adoption  is  certified. 

The  certificate,  written  upon  a  copy  of  the  agreement, 
is  as  follows  : 

a  The  foregoing  is  a  true  copy  of  the  agreement  of 
consolidation  entered  into  between  the  Cleveland,  Colum¬ 
bus,  Cincinnati  and  Indianapolis  Railway  Company,  and 
the  Cincinnati,  Hamilton  and  Dayton  Railroad  Compan}q 
and  which  has  been  duly  ratified  by  a  vote  of  more  than 
two-thirds  of  the  stockholders  of  each  company.  Witness 
our  hands  and  seals  of  said  respective  companies,  this  3d 
day  of  September,  1881. 

GEO.  H.  RUSSELL, 

Secretary  Cleveland ,  Columbus  and  Cincinnati , 
and  Indianapolis  Railroad  Company . 

[Seal  of  C.  C.  C.  &  I.  Co.] 

F.  H.  SHORT, 

Secretary  Cincinnati  Hamilton  and  Dayton 
Railroad  Company. 

[Seal  of  C.  II.  &  D.  Co.] 

The  agreement  itself  required,  as  one  of  the  terms  of 
consolidation,  that  “  two-thirds  of  all  the  votes  of  all  the  stock¬ 
holders  of  the  respective  companies ,  parties  hereto ,  should  be 


C  43  ] 


cast  for  adoption  of  the  agreement.  The  certificate  does 
not  follow  either  that  requirement  or  the  statute,  hut  asserts 
a  ratification  u  by  a  Vote  of  more  than  two-thirds  of  all  the 
stockholders making  it  turn  on  a  count  of  the  stock¬ 
holders  who  approved,  and  not  on  the  number  of  votes  cast, 
whether  present  at  the  meeting  or  otherwise* 

The  date  of  the  certificate  is  given,  but  the  date  or 
place  of  ratification  is  not  given.  It  does  not  state  that 
any  meeting  was  held,  or  that  separate  meetings  were  held, 
or  that  the  votes  were  bv  ballot.  It  states  that  “  the  agree- 
menfT  has  been  duly  ratified  by  a  vote  of  more  than  two- 
.  thirds  of  the  stockholders  of  each  company.”  It  is  not 
stated  that  two-thirds  of  the  votes  cast  were  for  the  adop¬ 
tion.  It  might  be,  without  strain  upon  the  imagination, 
that  more  than  two-thirds  of  the  stockholders  of  each  com¬ 
pany  voted  to  ratify ;  and  yet  that  less  than  two-thirds  of  the 
votes  cast  were  for  the  adoption.  This  whole  proceeding  is 
more  loose  than  the  one  referred  to  by  this  court  in  The 
State  v.  C.  0.  M.  R.  Association ,  29  Ohio  St.  399,  where  it  • 
declared  that  “  Such  an  organization  is  too  loose ,  indefinite , 
and  uncertain p.  407. 

The  same  certificate  is  signed  by  the  secretaries  of 
both  companies,  each  certifying  to  the  votes  of  his  own 
company  and  of  the  company  of  which  he  was  not  secre¬ 
tary. 

Neither  the  answer  to  the  quo  warranto ,  or  the  facts 
agreed,  can  help  out  the  agreement  for  consolidation,  or  the 
certificate  upon  it. 

The  agreed  facts  are  that  at  the  meeting  of  the  Cleve¬ 
land,  Columbus,  Cincinnati  and  Indianapolis  stockholders 
to  consider  the  agreement  of  consolidation,  two-thirds  of 
the  votes  cast  were  for  its  adoption  ;  but  that  less  than  two- 
thirds  of  all  the  votes  of  all  the  stockholders  of  that  com- 


[  44  ] 


pany  were  cast  for  it.  The  certificate,  therefore,  was  illu¬ 
sory.  The  material  point  here  is  that  the  agreement  was 
not  complied  with,  nor  was  the  certificate  made  which  was 
required  by  law,  nor  has  any  agreement  been  filed  which 
had  been  made,  ratified,  and  certified  as  the  law  requires. 


J.  H.  DEVEREAUX,  GEORGE  H.  RUSSELL,  F.  H.  SHORT,  STE¬ 
VENSON  BURKE,  THE  CLEVELAND,  COLUMBUS,  CINCIN¬ 
NATI  &  INDIANAPOLIS  RAILROAD  COMPANY,  AND  THE 
CINCINNATI,  HAMILTON  &  DAYTON  RAILROAD  COMPANY, 


VERSUS. 


Plaintiffs  in  Error. 


HUGH  J.  JEWETT,  TRUSTEE,  AND  R.  SUYDAM  GRANT, 

Defendants  in  Error. 


ARGUMENT. 

The  order  of  October  22,  1881,  in  Franklin  county 
Common  Pleas,  appointing  William  H.  Clement,  Receiver, 
and  enjoining  said  plaintiffs  in  error,  J.  H.  Devereaux, 
George  H.  Russell,  F.  II.  Short,  and  Stevenson  Burke,  from 
acting  as  directors,  trustees,  officers,  or  employes  of  the 
Ohio  Railway  Company,  is  the  thing  complained  of. 

I  understand  the  allegation  to  be  that  William  H. 
Clement  was  appointed  Receiver  of  the  Ohio  Railway 
Company,  but  he  was  not. 

It  is  charged  that  said  order  was  made  in  a  special 
proceeding  in  an  action  in  said  court,  wherein  said  defend¬ 
ants  in  error,  Hugh  J.  Jewett,  as  trustee,  and  R.  Suydam 
Grant  were  plaintiffs,  and  said  Cleveland,  Columbus,  Cin¬ 
cinnati  and  Indianapolis  Railway  Company,  the  Cincinnati, 
Hamilton  and  Dayton  Railroad  Company,  said  J.  H.  Dev¬ 
ereaux,  George  II.  Russell,  F.  II.  Short,  and  Stevenson 
Burke,  were  defendants. 

The  petition  alleges  manifest  error  in  said  record  and 
proceedings,  to  their  prejudice. 

1.  That  there  was  no  action  pending  in  said  court  of 
common  pleas  when  said  order  was  made  and  said  receiver 
was  appointed. 


(45) 


[  46  ] 

2.  That  said  receiver  was  appointed  and  said  order  was 
made  without  notice. 

3.  That  said  court  of  common  pleas  had  no  jurisdiction 
to  make  said  order. 

4.  The  petition  and  supplemental  petition  do  not  state 
facts  sufficient  to  authorize  the  appointment  of  said  re¬ 
ceiver. 

5.  Nor  “  to  authorize  the  granting  of  said  injunction.” 

6.  That  said  order  appointing  said  receiver  is  erroneous, 
illegal  and  void. 

7.  That  said  order  granting  said  injunction  is  er¬ 
roneous,  illegal  and  void. 

Wherefore  said  plaintiffs  in  error  pray  that  the  said 
orders  may  be  reversed,  vacated,  and  set  aside,  and  that 
they  may  be  restored  to  all  things  they  have  lost  by  reason 
thereof. 

This  refers  only  to  the  order  of  October  22,  and,  if  the 
prayer  should  be  fully  granted,  leaves  standing  the  order 
of  October  19. 

* 

I. 

The  first  error  assigned  is  that  when  the  order  of  Oc¬ 
tober  22  was  entered  there  was  no  action  pending. 

The  recital  in  the  petition  in  error  is  that  the  order 
was  made  in  a  special  proceeding  in  an  action  in  said  court 
wherein  said  defendants  in  error,  naming  them,  were  plaint¬ 
iffs,  and  said  plaintiffs  in  error,  naming  them,  were  defend¬ 
ants. 

This  suggests  an  inquiry  whether  there  can  be  an  ac¬ 
tion  in  a  given  court  which  is  not  pending  in  it. 


* 


[  47  ] 


All  agreement  for  consolidation  between  two  or  more 
railway  corporations,  which  are  not  by  law  authorized  to 
become  consolidated,  is  an  act  ultra  vires  both  of  the  direc¬ 
tors  and  of  the  corporations,  and  may  be  enjoined  at  the 
suit  of  one  or  more  stockholders  of  either  of  the  corpora¬ 
tions  attempting  such  unlawful  act. 

Green's  Brice’s  Ultra  Vires ,  p.  588,  speaking  of  the 
right  of  one  or  more  stockholders  to  enjoin  ultra  vires  acts, 
says : 

“This  proposition  is  now  so  completely  admitted, 
that  it  is  needless  to  cite  authorities  in  support.”  See, 
also,  note. 

/ 

III. 

There  wTas,  at  the  time  of  the  making  of  the  order 
conrplained  of,  pending  in  the  Court  of  Common  Pleas  of 
Franklin  county,  in  which  defendants  in  error  were  plaint¬ 
iffs  and  plaintiffs  in  error  were  defendants,  a  petition  duly 
verified  according  to  the  code,  allegingthat  plaintiffs  therein 
wTere  stockholders  in  the  Cleveland,  Columbus,  Cincinnati 
and  Indianapolis  Railway  Company;  that  said  Cleveland, 
Columbus,  Cincinnati  and  Indianapolis  Railway  Company, 
and  the  Cincinnati,  Hamilton  and  Dayton  Railroad  Com¬ 
pany,  and  others  therein  made  defendants,  who  are  plaint-' 
iffs  in  the  petition  in  error,  were  actively  engaged  in  pro¬ 
curing  and  making  an  unlawful  consolidation  between  said 
two  railroad  companies,  stating  the  facts  which  had  occurred 
and  were  intended,  to  the  great  injury  of  the  plaintiffs  in 
the  petition;  that  the  railroad  of  Cleveland,  Columbus, 
Cincinnati  and  Indianapolis  Company  extends  from  Cleve¬ 
land,  Ohio,  via  Gabon  and  Delaware,  to  Columbus,  Ohio ; 
and  praying,  on  behalf  of  themselves  and  other  stockhold- 


[  48  ] 


ers,  etc.,  that  said  defendants  be  temporarily  restrained  and 
enjoined  during  the  pendency  of  the  action,  and  for  other 
relief. 

The  petition  was  filed  in  said  Court  of  Common  Pleas 
in  Franklin  county,  on  the  19th  day  of  October,  1881. 

Process  of  summons  was  issued  to  the  sheriff  of  Frank- 

% 

lin  county  against  said  Cleveland,  Columbus,  Cincinnati 
and  Indianapolis  Railway  Company,  on  said  19th  day  of 
October,  1881,  returnable  on  the  31st  day  of  the  same 
month,  and  was  served  in  said  county  on  the  same  day  and 
returned. 

Another  summons  against  the  same  defendant  was  is- 
sued  to  the  sheriff'  of  the  same  county  on  the  same  day, 
which  was  received  and  served  by  the  sheriff*  on  the  same 
day,  and  was  returned. 

On  the  same  day  another  summons  was  issued  against 
the  same  defendant  and  the  Cincinnati,  Hamilton  and  Pay- 
ton  Company,  and  said  Devereaux,  Russell,  Short,  and 
Stevenson  Burke,  to  the  sheriff*  of  Cuyahoga  county,  re¬ 
turnable  on  November  7th,  which  summons  was  received 
by  the  sheriff'  and  served  on  all  the  defendants  on  the  20th 
of  October,  and  was  returned. 

Section  4987  of  the  Revised  Statutes  provides  that 

“An  action  shall  be  deemed  commenced,  within  the 
meaning  of  this  chapter,  as  to  each  defendant  at  the  date 
of  the  summons  which  is  served  on  him,  or  on  a  co-de¬ 
fendant  who  is  a  joint  contractor,  or  otherwise  united  in 
interest  with  him. 

On  the  22d  day  of  October,  1881,  defendants  in  error 
filed  in  the  same  case  their  supplemental  petition,  on  which 
the  order  complained  of  was  entered.  It  stated  the  issue 
and  service  of  process  and  of  the  restraining  order,  and  the 
violation  by  defendants  of  said  restraining  order,  asked 
leave  to  make  other  parties  defendants,  etc. 


[  49  ] 


The  line  of  railroad  built  by  the  Cleveland,  Columbus, 
Cincinnati  and  Indianapolis  llail way  Company,  and,  at  the 
time  of  the  filing  of  said  petition,  worked  and  owned  by 
it,  extended  into  Franklin  county  to  the  city  of  Columbus. 

Hot  having  seen  the  brief  for  plaintiffs  in  error,  I  un¬ 
derstand  that  the  ground  of  objection,  or  rather  one  ground 
of  objection,  is  based  on  the  idea  that,  in  the  absence  of  de¬ 
fendants,  other  than  said  railway  company,  jurisdiction 
could  not  be  made  in  Franklin  county. 

The  original  code,  51  0.  L.  65,  provided  as  follows : 

“See.  49.  An  action  against  a  railroad  company  or 
an  owner  of  a  line  of  mail  stages  or  other  coaches,  for  an 
injury  to  person  or  property  upon  the  road*  or  line ,  or  upon  a 
liability  as  a  carrier ,  may  be  brought  in  any  county 
through  or  into  which  said  road  or  line  passes.” 

“Sec.  50.  An  action  other  than  one  of  those  men¬ 
tioned  in  the  first  three  sections  of  this  chapter,  against  a 
turnpike  road  company,  may  be  brought  in  any  county 
in  which  any  part  of  the  road  lies.” 

The  Act  of  May  1,  1854,  52  0.  L.  102,  amended  the 
above  Sec.  49,  and  made  it  as  follows: 

4 

“Sec.  49.  An  action  against  the  owner  of  a  line  of 
mail  stages  or  other  coaches,  for  an  injury  to  person  or  prop¬ 
erty  upon  the  road  or  line ,  or  upon  a  liability  as  carrier ,  and 
any  action  against  a  railroad  company,  may  be  brought 
in  any  county  through  or  into  which  such  road  or  line 
passes;  and  said  original  section  forty-nine  is  hereby  re¬ 
pealed. ” 

The  Act  of  April  3,  1866,  63  0.  L .  87,  repealed  the  sec¬ 
tion  and  substituted  another  like  it,  except  in  the  language 
underscored  by  me,  as  follows: 

“Sec.  49.  An  action  against  the  owner  of  a  line  of 
mail  stages  or  other  coaches,  for  an  injury  to  person  or 
property  upon  the  road  or  line,  or  upon  a  liability  as  car- 


[  50  ] 


rier,  and  any  action  against  a  railroad  company,  may  be 
brought  in  any  county  through  or  into  which  such  road 
or  line  [ owned  or  leased  by  said  owner  or  railroad  company ] 
passes.” 

.  “Sec.  5027.  Revised  Statutes.  An  action  against  the 
owner  or  lessee  of  a  line  of  mail  stages  or  other  coaches, 
for  an  injury  to  person  or  property  upon  the  road  or  line, 
or  upon  liability  as  carrier,  and  an  action  against  a  rail¬ 
road  company,  may  be  brought  in  any  county  through  or 
into  which  such  road  or  line  parses.” 

“Sec.  5028.  An  action  other  than  one  of  those  men- 
-  > 

tioned  in  the  first  four  sections  of  this  chapter,  against  a 
turnpike  road  company,  may  be  brought  in  any  county 
in  which  any  part  of  the  road  lies.” 

sThe  original  section  49  of  the  code  placed  railroad  com¬ 
panies  and  lines  of  mail  or  other  coaches  on  the  same  foot¬ 
ing.  The  actions  provided  for  were  actions  for  an  injury 
to  person  or  property  upon  the  road  or  line,  or  upon  a  lia¬ 
bility  as  a  carrier. 

Section  50  made  no  such  limitation  as^to  the  kind  of 
actions  which  might  be  brought  against  a  turnpike  com¬ 
pany  in  any  county  in  which  any  part  of  the  road  lies.  ; 

The  Act  of  May  1,  1854,  52  0.  L.  102,  reconstructed 
the  section  relating  to  lines  of  coaches  and  railroads,  and 
limited  actions  to  be  brought  against  coach  lines;  but  it 
transposed  the  sentences,  and  placed  the  clause  relating  to 
railroads  after  the  limitation,  in  such  manner  that  the  lim¬ 
itation  did  not  apply.  It  guarded  against  a  possible  impli¬ 
cation  that  the  limitation  was  intended  to  apply  by  this 
language :  “  and  any  action  against  a  railroad  company  may 
be  brought  in  any  county  through  or  into  which  such  road 
or  line,  owned  or  leased  by  said  owner  or  railroad  com¬ 
pany,  passes.” 

There  was  no  apparent  motive  to  transpose  the  lan¬ 
guage  of  the  section,  except  to  change  its  meaning  in 


C  51  ] 


the  particular  referred  to.  If  the  limitation  as  to  kind 
of  actions  had  been  intended  to  be  kept  up,  no  such  lan- 
£mao;e  would  have  been  used.  In  the  original  section,  rail- 
roads  had  been  classed  with  stage  coaches,  which  do  not 
require  any  franchise  in  their  operations.  Bnt  a  turnpike 
company,  which  does  depend  upon  a  franchise,  might  be 
sued  in  any  county  in  which  any  part  of  the  road  lies. 
This  provision  relating  to  turnpike  companies  has  not  been 
changed. 

The  change  in  section  49,  I  apprehend,  places  turnpike 
and  railroad  companies  on  the  same  footing  as  to  the  coun¬ 
ties  in  which  they  may  be  sued.  Hor  is  it  easy  to  perceive 
any  reason  why  they  should  be  treated  differently  in  that 
respect. 

Sections  5027  and  5028  of  the  Revised  Statutes  pre¬ 
serve  the  law  as  it  stood  before,  omitting  only  the  passage 
which  had  been  added  to  section  49  of  the  original  code  by 
the  Act  of  April  3, 1866,  before  quoted.  The  phrase  omitted 
is  the  one  underscored  in  the  foregoing  statement  concern¬ 
ing  the  Act  of  1866,  viz.:  “  owned  or  leased  by  said  owner 

•  i 

or  railroad  company.” 

The  Act  of  March  21,  1850,  S.  $  C.  320,  sec.  2,  provides 
that  suit  may  be  brought  before  a  justice  of  the  peace 
against  any  railroad  company,  in  any  township  into  or 
through  which  the  road  of  such  company  may  be  located. 
And,  if  the  principal  business  office  of  the  company  is  not 
kept  in  such  township,  it  shall  be  the  duty  of  the  justice  of 
the  peace  to  issue  a  writ  of  summons  against  said  company, 
directed  to  the  sheriff  of  the  county  where  the  principal 
business  office  of  the  company  is  kept,  with  an  indorsement 

on  the  back  of  the  writ  of  the  name  of  the  post-office  to 

* 

which  said  writ  shall  be  returned;  and  the  plaintiff  may 
.transmit  the  same,  post-paid,  by  mail.  The  second  section 
provides  for  the  service  and  return  of  the  writ. 


I  IRRARV 


[  52  ] 


The  Act  of  31  arch  31,  1866,  63  0.  L.  63,  64,  amended 
the  act  last  above  mentioned,  so  that  section  2  of  the 
amended  act  reads : 

“Sec.  2.  Suit  may  be  brought  before  a  justice  of  the 
peace  against  any  railroad  company,  in  any  township  into 
or  through  which  the  road  owned  or  leased  by  said  com¬ 
pany  may  be  located.  And,  if  the  principal  business  of¬ 
fice  of  the  company  is  not  kept  in  the  township  in  which 
any  such  suit  may  be  brought,  it  shall  be  the  duty  of  the 
justice  of  the  peace  to  issue  a  writ  of  summons  against 
said  company,  directed  to  any  constable  in  the  township 
in  which  said  suit  may  be  brought.” 

Section  3  of  the  same  act  requires  the  constable  to  serve 
the  summons  forthwith  on  the  president  of  the  company, 
if  a  resident  of  the  county,  or,  if  the  president  is  not  a  resi¬ 
dent  of  or  have  a  place  of  business  within  the  county,  the 
service  to  be  made  “personally  upon  the  person  having  charge 
of  a  ticket  office,  or  upon  the  person  having  charge  of  a  freight 
depot. ,  owned  by  or  under  the  control  of  such  company ,  in  the 
county  where  the  suit  is  brought.” 

Section  6478  of  the  Revised  Statutes  is  the  foregoing  act 

enlarged,  authorizing  the  action  to  be  brought  in  any  town¬ 
ship, 

“  into  or  through  which  the  road  owTned  or  leased  by 
said  company  may  be  located,  whether  such  company  be 
foreign  or  created  under  the  laws  of  this  state,  and  whether 
the  charter  thereof  prescribes  the  place  where  the  suit 
must  be  brought  against  it,  or  the  manner  or  place  of 
service  of  process  thereon.” 

The  method  of  service  is  substantially,  and  I  believe 
exactly,  as  it  was  before. 

Section  5044  of  the  Revised  Statutes  provides  for  ser¬ 
vice  of  process  on  corporations  : 

“and  if  such  corporation  be  a  railroad  company,  whether 
foreign  or  created  under  the  laws  of  this  state,  and 


[  53  ] 


whether  the  charter  thereof  prescribes  the  manner  and 
place,  or  either,  of  service  of  process  thereon,  the  summons 
may  be  served  upon  any  regular  ticket  or  freight  agent 
thereof;  or  if  there  is  no  such  agent,  then  upon  an}^  con¬ 
ductor,  in  any  county  in  this  state  in  which  such  railroad 
is  located,  or  through  which  it  passes.” 

The  act  of  March.  31,  1866,  before  quoted,  authorizing 
suits  against  a  railroad  company  in  any  township  into  or 
through  which  the  road  “  owned  or  leased  by  said  company,” 
may  be  located,  etc.,  must  have  been  before  the  same  com¬ 
mittee,  and  the  same  General  Assembly,  as  the  act  of  April 
3,  1866,  passed  three  days  afterwards,  and  hereinbefore 
quoted.  It  was  probably  the  same  hand  which  penned  the 
phrase  above  italicized,  in  the  act  relating  to  suits  before  a 
justice  of  the  peace,  which  wrote  the  same  clause  which 
was  at  that  time  added  to  section  49  of  the  original  code ; 
that  is  to  say,  the  act  of  April  3,  1866.  The  policy  of  both 
acts  was  intended  to  he  the  same. 

Neither  the  act  authorizing  suits  against  railroad  cor¬ 
porations  before  justices  of  the  peace,  as  originally  passed, 
or  as  matured  in  the  revision,  limited  the  actions  which 
may  be  so  brought  to  any  particular  class.  Nor  can  sec¬ 
tion  5027  of  the  Kevised  Statutes  be  made  to  limit  the 
actions  which  may  be  brought  under  its  provisions  unless 
by  implying  language  not  there,  and  which  the  history  of 
the  section  shows  was  not  intended  to  be  there. 

I  am  not  able  to  conceive  anv  sound  reason  for  such  a 
limitation  if  it  had  been  made.  A  railway,  wherever  it 
passes,  affects  the  property,  the  rights  and  the  comfort  of 
the  public.  In  places  where  it  has  no  business  office,  and 
where  its  business  is  transacted  by  small  officials  and  agents, 
there  is  need,  for  those  who  have  to  do  or  to  bear  with  it,  of 
the  means  of  speedy  and  effectual  justice. 


[  54  ] 


A  railroad  company  lives  as  truly  and  as  much  in  any 
county  into  which  its  road  passes  as  in  any  other.  Its  cor¬ 
porate  franchises  and  powers  are  there,  and  its  legal  respon¬ 
sibility,  not  merely  in  theory  hut  in  fact,  should  he  there- 
Such  corporations  are  allowed  to  choose  the  places  for  their 
principal  business  offices,  and  for  their  subordinate  offices, 
and  to  place  in  them  such  officers  and  agents  as  they  choose. 
The  laws  of  Ohio  allow  persons,  who  have  or  think  they 
have  need  of  redress,  to  seek  it  at  any  place  on  the  line 
of  road  convenient  to  themselves. 

Railroad  companies  are  worked  in  connection  with 
telegraphs,  and  are  kept  advised  of  what  happens  on  any 
part  of  their  lines.  Their  officers  and  agents  abound  and 
travel  free.  But  suitors  under  the  law  as  claimed  by  plain¬ 
tiffs  in  error,  would  only  be  able  to  seek  redress  on  condi¬ 
tion  of  first  paying  tribute  to  their  adversary. 

If  parties  seeking  redress  against  the  actions  of  great 
railroad  corporations  are  forbidden  bylaw  to  seek  it  in  any 
jurisdiction  other  than  the  one  where  these  corporations 
are  likely  to  have  their  multitudinous  means  of  influence 
best  arranged  and  matured,  it  will  be  an  interesting  feature 
in  our  jurisprudence. 

It  may  be  argued  that  under  the  construction  of 
section  5027,  which  I  am  endeavoring  to  maintain,  actions 
against  railroad  companies  would  not  be  limited  to  actions 
other  than  those  mentioned  in  the  first  four  sections  of 
the  chapter,  as  actions  against  turnpike  companies  are  in 
the  next  section.  Possibly  there  maybe  a  question  of  in¬ 
advertence  or  of  construction.  But  I  apprehend  that  it 
was  unnecessary  to  express  that  exception  in  either  section. 
The  exceptions  exist  in  the  nature  of  the  case,  and  being 
specifically  provided  for  in  the  first  four  sections,  the  other 


[  55  ] 


sections  may  be  construed  as  in  pari  materia ,  and  not  as 
forbidding  those  exceptions. 

It  maybe  said  that  in  section  5027,  the  language  is, 
“■and  an  action  against  a  railroad  company”  is  substituted 
for  the  language  “and  any  action,”  as  it  stood  in  the  act 
of  May  1, 1854,  and  of  April  3, 1866.  But  unless  it  can  be 
made  to  appear  that  an  has  a  different  meaning  from  any , 
as  there  used,  the  fact  of  leaving  out  the  letter  y  is  not 
significant.  The  section  as  it  stood  in  the  original  code 
remained  but  a  short  time.  I  have  before  called  attention 
to  the  transposition  of  the  clauses  in  it,  so  that  by  position 
alone  the  clause  relating  to  railroads  would  not  be  affected 
by  the  limitation  as  it  had  been.  It  was  a  natural  thing, 
when  contrasting  the  intended  meaning  with  the  limitation 
to  particular  classes  of  actions,  as  it  stood  before,  to  say  “  and 
any  action  against  a  railroad  company.”  It  stood  in  that 
way  for  about  twenty-four  years.  The  revisers  chose  the 
word  “an”  in  this  case  as  in  many  others,  to  express  the 
same  meaning.  If  they  looked  at  Webster’s  Unabridged 
Dictionary,  they  found  what  they  must  have  known  before, 
that  one  of  the  definitions  of  the  word  “  an”  is  “  any.” 

By  section  5044  a  summons  against  a  corporation  may 

be  served  upon  the  president,  mayor,  chairman,  or  president 

of  the  board  of  directors,  or  trustees,  or  other  chief  officer  ; 

or  if  its  chief  officer  is  not  found  in  the  county,  upon  its 

cashier,  treasurer,  secretary,  clerk,  or  managing  agent,  etc., 

and  if  a  railroad  company,  upon  any  regular  ticket  or 

freight  agent  thereof;  or  if  there  is  no  such  agent,  then 
* 

upon  any  conductor,  in  any  county  in  this  state  in  which 
such  railroad  is  located,  or  through  which  it  passes. 

By  section  5038,  when  the  action  is  rightly  brought 
in  any  county,  according  to  the  provisions  of  chapter  five 
of  division  two  (the  chapter  from  which  quotations  have 


[  56  ] 


been  made  to  show  where  an  action  may  be  brought),  then 
a  summons  may  be  issued  to  any  other  county  against  one 
or  more  of  the  defendants,  etc. 

In  this  case  the  record  shows  that  the  summons  against 
defendant,  Cleveland,  Columbus,  Cincinnati  and  Indianapo¬ 
lis  Company,  was  served  in  Franklin  county  on  October  19, 
1881,  by  delivering  personally  to  C.  F.  Evans,  the  regular 
freight  agent  of  said  Cleveland,  Columbus,  Cincinnati  and 
Indianapolis  Company,  a  certified  copy  of  the  writ ;  neither 
the  president,  vice-president,  nor  the  other  chief  officers  of 
said  corporation  being  found  in  the  county ;  and  by  also 
delivering  a  certified  copy  to  J.  W.  Collier,  an  agent  of  said 
company. 

The  action  being  rightly  brought  in  said  county  as  to 
defendant,  Cleveland,  Columbus,  Cincinnati  and  Indianap¬ 
olis  Company,  a  summons  was  issued  against  the  other  de¬ 
fendants  to  Cuyahoga  county,  and  also  against  the  Cleve¬ 
land,  Columbus,  Cincinnati  and  Indianapolis  Company,  and 
served  on  the  20th  October  on  them  all.  The  service  as  to 
these  two  corporations  was  made  personally  on  the  presi¬ 
dent  of  each,  and  also  made  personally  on  the  individual 
defendants  by  copy  delivered  to  each. 

There  was,  therefore,  an  action  pending,  unless  some 
ground  not  yet  considered  may  be  held  to  have  produced  a 
contrary  result. 

The  only  ground  which  I  have  heard  suggested  for 
contending  that  no  action  was  pending  is  the  one  already 
considered,  and  another  now  to  be  considered. 

It  is  contended  that  the  consolidation  had  taken  place 
before  process  was  served,  and  that  the  two  railroad  corpora¬ 
tions  had  ceased  to  exist,  and  had  been  merged  in  a  new 
corporation,  called  The  Ohio  Railway  Company. 

Unless  the  proceedings  for  consolidation  were  valid, 
the  result  claimed  could  not  have  happened.  Whether 


[  57  ] 


or  not  the  proceedings  for  consolidation  were  valid  is  tlie 
main  question  in  this  whole  controversy. 

But  whether  they  were  valid  or  not,  I  apprehend  they 
had  not  reached  a  stage  to  extinguish  the  existence  of  the 
contracting  companies,  as  holding  and  representing  the 
title  to  the  corporate  assets  and  franchises,  which  they 
owned  before  the  consolidation  was  initiated. 

By  section  3382,  “  when  the  agreement  is  made  and 
perfected,”  and  the  same  or  a  copy  has  been  filed  with  the 
Secretary  of  State,  the  several  companies  “  parties  thereto,” 
shall  he  deemed  and  taken  to  he  one  company,  possessing 
within  this  state  all  the  rights,  privileges,  and  franchises 
of  a  railroad  company.  If  the  proceedings  had  been  rightly 
taken  and  perfected,  I  suppose  the  record  in  the  office  of 
the  Secretary  of  State  would  be  equivalent  to  the  ordinary 
certificate  acknowledged,  certified,  and  filed  by  five  corpo¬ 
rators.  It  would  then  be  a  corporation  and  have  a  capacity 
to  take,  but  would  have  taken  nothing  except  that  corporate 
capacity. 

By  section  3384,  the  “  rights,  privileges,  and  franchises  ” 
of  each  of  the  companies  to  the  agreement ,  and  all  assets 
would  pass  only  “  upon  the  election  of  the  first  board  of 
directors,”  which  did  not  happen  until  after  all  the  writs 
had  been  served. 

M.  C.  §  L.  M.  B.  B.  Co.  v.  Brown  efal.9  26  Ohio  St. 
223. 


I  shall,  therefore,  submit  that  the  first  error  assigned 
is  not  shown  to  have  been  committed,  but  that  there  was 
an  action  pending  in  said  Court  of  Common  Pleas  when 
said  order  was  made,  and  when  said  receiver  was  ap¬ 
pointed. 

The  petition  in  error  does  not  complain  of  the  tempo¬ 
rary  restraining  order  allowed  when  the  petition  was  filed, 
and  which  was  served  with  the  regular  process,  shown  on 


[  58  ] 


page  21  of  the  Record.  Nothing  is  said  against  the  valid¬ 
ity  of  the  restraining  order  in  case  there  was  in  law  an  ac¬ 
tion  pending. 

All  the  errors  assigned,  after  the  first,  relate  to  the  or¬ 
der  appointing  a  receiver,  and  to  the  injunction  allowed  at 
the  same  time. 

The  assignment  of  error  that  the  court  had  no  juris¬ 
diction  to  make  the  order,  which  is  No.  3  of  the  errors  al¬ 
leged,  and  the  errors  alleged  and  numbered  6  and  7,  that 
the  order  appointing  the  receiver  and  granting  said  injunc¬ 
tion  is  void,  are  probably  intended  to  refer  to  the  supposed 
absence  of  jurisdiction;  or,  what  is  the  same  thing  in  dif¬ 
ferent  words,  to  the  supposed  fact  that  no  action  was 
pending. 

All  the  other  assignments  refer  to  the  circumstances 
shown  as  cause  for  the  order,  and  as  being  insufficient. 
The  showing  may,  therefore,  he  treated  all  together. 

The  showing  was  that  the  two  corporations  named  had 
entered  into  an  agreement  to  consolidate  their  companies 
contrary  to  law ;  that  their  lines  of .  road  are  not  such  as 
the  law  permits  to  be  brought  under  the  same  management 
by  consolidation ;  that  the  agreement  had  not  been  made 
and  perfected  in  a  manner  to  make  a  valid  consolidation, 
if  the  roads  and  companies  had  been  such  as  the  law  per¬ 
mits  to  he  consolidated ;  that  the  defendant  corporations 
had  called  a  meeting  to  be  held  at  Cleveland  on  the  day 
next  after  the  filing  of  the  petition,  to  elect  directors  of  the 
proposed  new  corporation,  and  to  complete  and  consummate 
the  unlawful  consolidation ;  that  individual  defendant, 
Devereaux,  was  president  of  both  corporations;  defendant, 
Burke,  vice-president  of  one  of  them ;  that  defendant, 
Russell,  was  secretary  of  one  of  them  ;  that  said  defendants, 
Devereaux,  Russell,  Short,  and  Burke  had  been  and  were 
active  in  devising  and  carrying  out  the  unlawful  scheme. 


[  59  J 

and  were  actively  engaged  to  complete  it  by  the  election  ot 
directors,  etc. 

That  the  interests  of  plaintiffs  as  stockholders  in  said 
Cleveland,  Columbus,  Cincinnati  and  Indianapolis  Com¬ 
pany  would  be  greatly  prejudiced  and  irreparably  injured 
by  reason  of  the  furthering  and  completing  said  consolida¬ 
tion  ;  that  it  would  confuse  the  earnings  and  expenses  re¬ 
spectively  of  said  defendant  corporations,  and  be  otherwise 
greatly  to  the  damage  of  the  plaintiffs. 

The  petitioners  on  their  own  behalf,  and  on  behalf  of 
all  the  stockholders  of  the  defendant,  the  Cleveland,  Co¬ 
lumbus,  Cincinnati  and  Indianapolis  Company,  who,  etc., 
prayed  a  restraining  order  against  said  corporations,  de¬ 
fendants,  their  directors,  stockholders,  servants,  and  agents, 
from  doing  any  act  toward  the  completion  of  said  consoli¬ 
dation,  and  specifying  with  great  particularity  many  acts  to 
be  prohibited. 

The  petition  was  duly  verified  and  supported  by  affi¬ 
davits,  and  a  restraining  order  was  allowed  as  prayed. 

It  was  further  shown  by  undoubted  affidavits  that  the 
restraining  order  had  been  served  upon  all  [the  defendants 
named  in  the  actions;  and  cause  was  shown  for  adding 
other  defendants. 

It  was  shown  that  nothwithstanding  the  restraining 
order  the  meeting  by  it  forbidden  to  be  held  was  held; 
and  that  the  defendants  restrained  from  taking  part  in  it 
were  nevertheless  present  and  did  take  part  in  it. 

That  Mr.  Ferguson,  one  of  the  counsel  for  plaintiff's, 
was  present  at  the  meeting,  and  before  action  was  taken  on 
the  subject  for  which  the  meeting  was  called,  publicly  pre¬ 
sented  a  copy  of  the  petition  and  the  restraining  order,  and 
stated  its  provisions  to  the  assembled  officers  and  stock¬ 
holders,  and  warned  them  that  they  could  not  proceed  to 
elect  directors  for  the  contemplated  Ohio  Railway  Com- 


[  60  ] 


pany  without  violating  the  restraining  order.  Some  of  the 
defendantsfin  the  case  and  other  stockholders  took  up  a 
debate  with  Mr.  Ferguson  on  the  subject,  which  brought 
the  whole  subject  of  the  restraining  order  and  the  charac¬ 
ter  of  it  to  the  attention  of  all  who  attended  the  meeting. 
The  meeting  nevertheless  proceeded  with  the  election,  and 
elected  a  board  of  directors,  etc. 

The  defendant  companies,  by  disregarding  the  restrain¬ 
ing  order,  had  taken  the  step  which,  if  their  proceedings 
had  been  according  to  law,  would  have  completed  the  act 
of  consolidation,  and  would,  without  further  conveyance, 
have  transferred  all  the  franchises  and  assets  of  the  defend¬ 
ant  companies  to  the  new  company. 

It  would  have  done  more.  Referring  to  my  argument 
in  the  quo  warranto  case,  without  repeating  it,  the  consoli¬ 
dation,  perfected  on  the  basis  of  the  agreement,  would  have 
transferred  all  the  assets  and  franchises  of  six  railway  com¬ 
panies  to  the  new  corporation. 

The  persons  so  elected  as  directors  of  the  new  com¬ 
pany  immediately  proceeded  to  elect  a  president  and  other 
executive  officers  of  said  new  company,  and  to  confirm  ap¬ 
pointments  and  agencies  made  by  the  president  and  ex¬ 
ecutive  officers  as  elected  and  approved,  and  to  take  steps 
for  obtaining  the  immediate  possession  of  the  assets  of  the 
old  companies  on  behalf  of  the  new  company. 

Among  other  allegations  in  the  supplemental  petition 
was  this : 


“That  said  pretended  directors  and  officers  of  said 
pretended  new  corporation  intend  to,  and  unless  stopped 
by  the  effective  intervention  of  this  court,  will  take  con¬ 
trol  and  management  of  the  property,  franchises,  and  as¬ 
sets  of  every  kind,  of  the  two  railroad  companies  defend¬ 
ants  in  this  case,  in  the  name  of  said  pretended  new 
corporation,  and  will  abandon  and  cause  to  be  dissolved 
the  two  railroad  companies,  defendants  in  this  case.” 


[  61  ] 


and  this  : 

“That  unless  said  pretended  directors  and  officers  of 
the  new  company  shall  be  prevented  by  the  action  of  this 
court,  they  will  treat  the  assets  and  earnings  of  both  of 
said  old  companies  as  belonging  to  the  pretended  new 
company,  and  keep  the  accounts  accordingly;  and  the 
assets,  rights  and  franchises  of  the  share-holders  in  the 
old  companies  will  be  intermingled  and  confused  beyond 
redress.” 

The  order  complained  of,  among  other  things,  recites  : 

“Whereupon  and  upon  consideration  of  the  original 
and  supplemental  petitions  and  the  affidavits  of  H.  J. 
Booth  and  Julius  J.  Pomerine,  and  the  returns  of  the 
sheriffs  of  Franklin  and  Cuyahoga  counties,  respectively, 
which  were  offered  by  plaintiffs  in  support  of  said  motion, 
and  upon  hearing  counsel  for  plaintiffs,  the  court  doth 
adjudge  and  order,”  etc. 

Among  the  facts  so  before  the  court,  as  part  of  the 
original  petition,  was  a  copy  of  the  agreement  for  consoli¬ 
dation,  on  the  face  of  it  neither  framed  by  directors  nor 
approved  by  stockholders,  nor  certified,  as  required  by  law. 

Why,  then,  should  not  the  court  have  made  the  order  ? 
Was  there  a  statement  or  allegation  in  the  proceedings 
about  which  the  court  could  entertain  any  doubt  ?  Has 
a  material  statement  in  the  original  or  amended  petitions 
or  affidavits  been  at  any  time  discredited?  Was  there, 
either  in  the  character  of  plaintiffs  or  in  the  nature  of  the 
redress  sought,  any  thing  irresponsible  or  wanton,  or  which 
could  be  hurtful  to  defendants,  or  which  could  he  aimed  at 
any  purpose  other  than  the  preservation  of  the  property 
and  franchises  in  which  plaintiffs  were  interested  ?  The 
purpose  of  the  defendants,  openly  declared  and  acted  upon, 
was  not  at  the  time  concealed  and  has  not  since  been  dis¬ 
avowed. 

Defendants  contend  that  in  no  case  can  a  receiver  be 


[  62  ] 


appointed  without  notice  to  the  adverse  party,  or  service 
of  process,  or  both.  If  such  is  the  law,  it  can  be  shown. 
The  burden  is  on  them.  But  if  it  be  found  that  it  can,  in 
some  cases,  be  done,  the  subject  must,  to  that  extent,  he 
within  the  discretion  of  the  court. 

In  C.  S.  $  C.  R.  R.  v.  Sloan ,  31  0.  S.  1,  it  was  con- 

/ 

tended  by  counsel  that  the  appointment  of  a  receiver  is 
matter  of  discretion.  The  court  said: 

“As  a  general  proposition  this  is  true  (p.  13),  but 
only  in  a  ease  calling  for  the  exercise  of  discretion.” 

I  apprehend  that  the  meaning  of  this  is  that  the  court 
must  have  jurisdiction,  and  that  the  subject  must  he  so 
presented  as  to  call  for  the  action  of  the  court,  either  to 
grant  or  refuse.  To  the  same  point  see — 

Kerr  on  Receivers ,  p.  3. 

2  Daniels'  Chancery  Practice ,  1406. 

2  Story's  Hq.,  §  831. 

It  is  not  denied  that  a  case  of  urgency  must  be  shown 
to  call  for  the  appointment  of  a  receiver  without  notice  to 
the  adverse  party. 

High  on  Receivers ,  sec.  113,  says : 

“  To  warrant  a  court  in  entertaining  an  application 
for  a  receiver  without  notice,  it  must  be  clearly  shown 
that  the  delay  which  would  result  from  giving  notice 
would  defeat  the  rights  of  the  plaintiff,  or  result  in  great 
injury  to  him.” 

See  also  Kerr  on  Injunctions ,  p.  577. 

In  Kernber  v.  Harding ,  4  How.  Pr.  R.  178,  the  court 
stated  what  the  chancery  .practice  required: 

“  By  that  practice,  a  receiver  could  not  be  appointed 
without  notice,  except  under  peculiar  circumstances,  de¬ 
manding  immediate  action  tp  be  made,  to  appear  by  the 
papers  upon  which  the  application  is  made.  And  in  such 


[63] 


cases  the  receiver  was  appointed  for  the  protection  of  the 
property  pendente  life,  and  the  order  did  not”  (as  in  the 
case  then  under  consideration)  “assume  to  make  a  final 
disposition  of  the  property  without  a  hearing  of  the 
parties.” 

Jurisdiction  to  protect  property  during  litigation  does 
not  require  a  conclusive  showing  of  right,  but  only  a  fair 
prima  facie  case  in  support  of  the  title  asserted,  and  that 
there  is  a  fair  question  to  raise — that  the  probabilities  are 
in  favor  of  the  applicant. 

Kerr  on  Injunctions ,  p.  197. 

The  present  case  is  very  different  from  an  effort  to  get 
possession  of  property  for  the  plaintiffs,  or  take  it  away 
from  a  defendant  who  had  title.  Here  there  was  a  joint 
and  common  interest,  placed  under  the  management  of 
trustees  for  the  common  benefit,  who  avowed  their  purpose  to 
dissolve  the  corporations  they  were  appointed  to  preserve. 

The  court,  in  the  first  instance,  restrained  them  from 
the  proposed  act.  Neither  the  court  nor  plaintiffs  proposed 
to  disturb  their  possession.  The  object  was  to  preserve  the 
common  property.  But  the  defendants  committed  an  of- 

1  y  ' 

fense  which  rarely  happens,  and  which,  exposed  the  prop¬ 
erty  to  extreme  hazard.  They  refused  obedience  to  the 
order  of  court. 

“  With  whatever  irregularities  the  proceedings  may 
be  affected,  or  however  erroneously  the  court  may  have 
acted  in  granting  the  injunction  in  the  first  instance,  it 
must  be  implicitly  observed  so  long  as  it  remains  in  exist¬ 
ence,  and  the  fact  that  it  has  been  obtained  erroneously 
affords  no  justification  or  excuse  for  its  violation  before  it 
has  been  properly  dissolved.” 

High  on  Injunctions ,  sec.  848. 

“To  render  an  injunction  binding  and  operative  upon 
a  defendant,  it  is  not  necessary  that  he  should  have  been 


4 


[  64  ] 


officially  apprised  of  its  existence,  or  actually  served  with 
the  writ.  And  where  a  defendant  has  heard  the  order  of 
the  court  granting  an  injunction,  or  has  in  any  manner 
received  actual  notice  of  its  existence,  he  is  effectively 
bound  by  its  provisions  as  if  actually  served  with  pro¬ 
cess.” 

High  on  Injunctions ,  p.  14,  sec.  20. 

The  breach  of  an  injunction  is  in  the  nature  of  a  tort. 
High  on  Injunctions ,  section  877,  p.  514. 

This  breach  of  injunction  was  part  of  the  case  for  a 
receiver;  indeed,  no  receiver  would  have  been  called  for 
without  it.  The  defendants  had  made  an  equitable  execu¬ 
tion  necessary. 

If  a  notice  had  been  required,  upon  whom  and  how 
could  it  have  been  served  ?  The  affidavits  offered  showed 
that  the  injunction  had  been  declared  ineffective  by  the  de¬ 
fendant  companies,  because  not  served  on  many  of  the 
stockholders.  They  insisted  that  notice  was  not  enough. 
They  had  in  defiance  of  the  restraining  order  taken  the 
final  step  which,  in  their  opinion ,  disbanded  the  old  companies , 
disposed,  of  all  their  assets ,  and  brought  into  existence  a  new 
corporation.  In  addition  to  this  they  had  disbanded,  and  as 
individuals  had  scattered  to  different  cities,  counties,  and 
states.  There  was  no  more  reason  for  notifying  any  one  of 
them  than  for  notifying  all.  They  all  disclaimed  any  offi¬ 
cial  or  representative  capacity. 

The  new  company  was,  in  the  opinion  of  plaintiffs,  a 
void  thing.  It  had  no  authority  or  right  to  be.  The  property 
was  the  only  thing  that  could  be  reached  by  notice  or  pro¬ 
cess.  It  was  appropriate  and  necessary  that  it  should  be 
preserved  until  the  rightful  owner  should  be  known. 

It  has  been  said  that  Cleveland,  Columbus,  Cincinnati 
and  Indianapolis  Company  was  not  a  party  interested  ad¬ 
versely  to  the  plaintiffs.  If  this  saying  is  in  any  sense  true, 


[  65  ] 


I  suppose  its  relevancy  to  this  case  must  be  as  follows: 
Not  being  adversely  interested,  it  should  not  have  been 
made  a  party  defendant.  In  this  view  it  may  be  contended 
that  jurisdiction  over  other  parties  not  in  Franklin  county, 
can  not  be  made  by  suing  that  company  and  serving  pro¬ 
cess  upon  it  in  Franklin  county. 

The  only  sense  in  which  it  can  be  said  the  Cleveland, 
Columbus,  Cincinnati  and  Indianapolis  Company  was  not 
adversely  interested  is  this :  A  corporation  can  have  no 
legal  interest  adverse  to  its  own  existence,  or  adverse  to 
the  limitations  of  its  charter.  But  in  this  view  there  could 
be  no  jurisdiction  for  remedies  at  the  suit  of  stockholders 
against  a  corporation  for  acts  ultra  vires.  Yet  the  juris¬ 
diction  is  established.  The  idea,  therefore,  in  the  only  sense 
in  which  it  can  be  true,  is  irrelevant  to  the  case. 

The  writ  of  error  in  this  case  can  in  any  event  reach 
no  further  than  the  question  of  jurisdiction,  if  that,  ques¬ 
tion  shall  be  decided  in  favor  of  defendants  in  error. 

Goode  v.  Wiggins ,  12  Ohio  St  341. 

The  case  of  C.  S.  $  C.  R.  Co.  v.  Sloan ,  31  Ohio  St.  1, 

i 

does  not,  as  I  understand  it,  controvert  the  principle  stated 
in  Goode  v.  Wiggins. 

Mr.  J  ustice  White,  in  delivering  the  opinion,  said  : 

•  }  l!  i.Gi  , 

“And  it  seems  to  us  that  where  property  has  been 
taken  under  a  special  proceeding,  and  an  order  has  been 
made  determining  the  rights  of  the  parties  in  such  proceed¬ 
ing,  as  by  vacating  a  receivership  or  discharging  an  attach¬ 
ment,  that  an  order  made,  which  deprives  a  party  of  thd 
benefit  of  adjudication ,  affects  a  substantial  right.” 

In  Good  v.  Wiggins ,  the  receivership  had  not  been  dis¬ 
charged.  The  mischief  had  not  happened  which  was  the 
test  in  the  case  against  Sloan.  There  had  not,  therefore, 
been  an  order  determining  the  rights  of  the  parties.  In 


[  66  ] 


the  case  against  Sloan  there  had  been  such  an  order.  It 

# 

“  deprived  the  party  of  the  benefit  of  adjudication,”  and  in 
that  sense  affected  a  substantial  right. 

So  in  Watson  Sf  Co.  v.  Sullivan ,  5  Ohio  St.  42,  an  at¬ 
tachment  was  discharged. 

It  is  not  my  contention  that,  under  the  Ohio  code,  and 
on  the  principle  stated  in  the  case  against  Sloan,  a  receiver¬ 
ship  may  not  be  granted  under  circumstances  possible  to  be 
♦imagined,  which  would  be  discharged  on  a  writ  of  error. 
But  my  contention  is  that  the  situation  in  this  case  is  not 
one  which  in  the  exercise  of  sound  discretion,  either  calls 
for  or  permits  such  a  discharge. 

I  contend  that  the  action  was  rightly  brought  and 
service  of  process  rightly  made  on  the  Cleveland*  Colum¬ 
bus,  Cincinnati  and  Indianapolis  Company  in  Franklin 
county ;  that  process  was  rightly  issued  to  other  counties, 
and  rightly  served  on  the  other  defendants;  that  the  agree¬ 
ment  for  consolidation  was  on  its  face,  when  compared  with 
statutory  requirements,  null  and  void;  or,  conceding  to 
possible  differences  of  opinion,  it  was  at  best  so  loose  and 
vague  that  parties  in  interest  might  well  doubt  its  valid¬ 
ity,  and  that  the  situation  created  was  one  which  not  only 
justified,  but  required  that  it  should  be  tested. 

I  contend  that  the  granting  of  the  restraining  order 
was  a  reasonable  and  ordinary  exercise  of  judicial  discre¬ 
tion  in  administering  remedial  justice;  that  the  refusal  of 
defendants  to  respect  and  obey  the  restraining  order,  and 
their  persistence  in  defiance  of  it,  in  taking  the  forbidden 
steps  to  extinguish  the  old  corporations,  and  in  transferring 
the  assets  to  a  new  one,  before  their  right  to  do  so  could  be 
tested,  demanded  the  prompt  appointment  of  a  receiver. 
Less  than  was  done  would  have  been  misunderstood.  It 
would  have  represented  remedial  processes  and  tribunals  in 


[  67  ] 

the  presence  of  an  audacious  combination  as  inapt  and  al¬ 
ready  enfeebled. 

The  view  which  I  take  of  the  case  renders  it  unneces¬ 
sary  to  discuss  the  proceedings  in  the  Court  of  Common 
Pleas  of  Cuyahoga  county. 


